Socially Responsible Investing Assets Surge 18%

Socially responsible investing (SRI) in the U.S. is growing at a much faster pace than other investment assets under professional management, according to a newly published report.

Spurred by factors such as rising institutional investor interest, growing demand for climate-related renewable energy alternatives, concerns about the Sudan humanitarian crisis, and the emergence of new products, SRI assets increased more than 18% from 2005 to 2007, the Social Investment Forum (SIF) found. In the same period all investment assets under management edged up by less than 3%.

The ‘Report on Socially Responsible Investing Trends in the United States’ identifies $2.71 trillion in total assets under management using one or more of the three core SRI strategies–screening, shareholder advocacy, and community investing. In the past two years, social investing has enjoyed healthy growth from the $2.29 trillion documented in the 2005 Trends report.

Today, nearly one out of every nine dollars under professional management in the United States is involved in socially responsible investing–11% of the $25.1 trillion in total assets under management tracked in Nelson Information’s Directory of Investment Managers.

Social Investment Forum Board Chair Cheryl Smith CFA, Ph.D. said, "Increasingly, money managers are incorporating social and environmental factors into their investing practices, acknowledging the demand for social investing products and services from institutional and individual investors, socially concerned high-net-worth clients, individuals seeking SRI options in their retirement and college-savings plans, and ‘mission-driven’ institutions including foundations, endowments, labor unions, and faith-based investors."

Highlights of the new Social Investment Forum Trends report include the following:

SCREENED FUNDS: Assets in all types of socially and environmentally screened funds–including mutual funds and exchange-traded funds (ETFs)–rose to $201.8 billion in 260 funds in 2007, a 13% increase over the $179.0 billion in the 201 tracked in 2005.

Eight socially and environmentally screened exchange-traded funds (ETFs) with $2.25 billion in total net assets were available through the end of 2006–the first time SRI-focused ETFs have been a factor in a Social Investment Forum Trends report.

INSTITUTIONAL INVESTORS: At more than $1.9 trillion in assets, socially screened separate accounts managed for institutional investors and high net worth individual clients constituted the bulk of SRI assets tracked in 2007, up 28% from $1.5 trillion in 2005.

SHAREHOLDER RESOLUTIONS: The average level of shareholder support for resolutions on social and environmental issues increased 57% from 9.8% in 2005 to 15.4% in 2007, a record high.

COMMUNITY INVESTING: Assets in community investing institutions rose nearly 32% from $19.6 billion in 2005 to $25.8 billion in 2007.

Social Investment Forum Board Member/Trends Committee Chair Alisa Gravitz, said: "The big news is that in this most recent period, we also saw unprecedented innovation in terms of products and issues. New investment products and fund styles are driving growth in socially and environmentally screened funds, especially ETFs and alternative investment funds such as social venture capital, double- and triple-bottom-line private equity, and hedge funds."


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