FAMILY

Aligning Portfolios with Personal Values

Your investment strategy can be more than just a means of accumulating wealth; it can be a tool for supporting the positive change you wish to see in the world. As of 2018, more than one out of every four dollars under professional management in the U.S. is devoted to sustainable, responsible, or impact investing strategies, totaling $12 trillion.¹

Making smart investment decisions and creating positive change is no longer an either/or dilemma. It is also no longer exclusively accessible to institutions and the ultra high net worth. In fact, Morgan Stanley’s Investing with Impact platform offers more than 120 products that allow experienced and novice investors alike to pursue both objectives simultaneously, without sacrificing financial returns.

While 84% of institutional asset owners are pursuing or considering pursuing sustainable investing strategies,² lack of information and a clear roadmap on how to get started presents a significant hurdle. We spoke with Audrey Choi, Morgan Stanley’s Chief Marketing Officer and Chief Sustainability Officer, about aligning investment portfolios with personal values and how you can start putting your money to work toward a brighter future.

What defines sustainable investing?

We define sustainable investing as an investment approach that aims to generate market-rate financial returns while demonstrating positive environmental and/or social impact. For example, at Morgan Stanley, we talk about four broad categories of sustainable investing: Values Alignment, Environmental, Social, and Governance (ESG) integration, Thematic Exposure, and Impact Investing.

Do you need a certain level of wealth to start making sustainable investments?

Up until 3–5 years ago, sustainable investing was largely viewed as a private equity play. Most of the sustainable investment products were not accessible to the average investor. Today, there is a much broader range of products and managers available, spanning asset classes and themes such as fossil fuel aware, faith-based, gender lens, and mission-aligned approaches. There is something for all ages and at all asset levels—from ESG mutual funds and thematic ETFs to green bonds and customized portfolios.

What advice would you give someone who is new to sustainable investing?

Start by asking yourself what issues are most important to you and whether you want to focus on “screening out” (avoiding investments that do not meet certain criteria) or “investing toward” (proactively selecting investments that reflect your values or address issues you care about). Take a closer look at the investments you already own and evaluate whether there are any changes you can make to better align your portfolio with your values.

How do you anticipate the industry evolving over the next 5 years?

Philanthropic and governmental resources are not enough to solve the pressing social issues we are facing; we need to incorporate investing as another means of addressing these problems. Within 5 to 10 years, sustainable investing may become a redundant term. When making an investment, people will consider environmental and social impact potential right alongside the traditional financial risk/return analysis.

For more helpful resources including tips and insights on navigating various life milestones, contact your Morgan Stanley Financial Advisor.