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5 Ways To Ensure You’re Managing Your Sustainable Portfolio Correctly

Sustainable investing is one of the most rapidly growing segments in the investment world. The demand for these products continues to grow as consumers and investors become increasingly aware of their investments’ impact on the world around them.

If you’re just getting started with sustainable investing, there are a lot of things to know. But don’t worry — we’ve got you covered! Keep reading to learn the secrets to managing a sustainable portfolio correctly.

1. Research, Research, and More Research

The first and most important step to successful sustainable investing is to do your research. You see, sustainable investing is a very new field, with very new companies and strategies, and some of the data behind these products is very scarce.

To make an educated investment decision, you’ll need to do your due diligence to ensure you fully understand your investment and how it works.

You’ll want to read white papers from the company’s CEO, analyze company financials, review the product or service the company offers, and read up on the industry the company operates.

2. Don’t Forget To Look at the Big Picture

When you’re researching individual investments and funds, it’s important not to get lost in the weeds. You’ll need to understand the benefits and drawbacks of each investment, but you’ll also want to make sure you look at the big picture.

While some sustainable investors might take a hit on their portfolio, you’ll want to be sure that you’re able to weather any storm that might come your way. After all, sustainable investing is supposed to be a long-term strategy that outperforms traditional investing strategies.

3. Make Sure You Understand Your Investments

This one is pretty straightforward — make sure you understand the investments you’ve made.

What problem does this company or fund solve? How does this product or service help people or the environment? You’ll also want to understand the competitive landscape. What are the strengths and weaknesses of each of your investments?

These details are especially important when you’re investing in a fund. After all, you don’t want to blindly put your money into a fund that may not meet your needs.

4. Choose the Right Benchmarks

When evaluating your investments, it’s important to choose the right benchmarks. This is particularly important if you’re investing in a social or impact fund since you’ll want to compare your performance to the fund’s benchmark.

Ensure you’re tracking the fund’s total return — not just the fund’s investment performance.

Overall, this is a great way to ensure that you’re measuring your sustainable investment correctly.

5. Check Your Portfolio’s Exposure To Different Asset Classes

No matter how sustainable your portfolio is, you’ll want a certain amount of exposure to stocks, bonds, and cash. This is the only way to protect yourself against the inevitable market downturns.

All the same, you must make sure that your portfolio has the right mix of asset classes. You’ll want to managing a sustainable portfolio to have a low to moderate amount of exposure to stocks, a moderate amount of exposure to bonds, and a low amount of exposure to cash.

You’ll want your investments to be as balanced as possible.

Managing a Sustainable Portfolio – Summing It Up

Sustainable investing is a rapidly growing segment of the investment world, and for a good reason — sustainable investing has the potential to provide powerful, long-term returns while also positively impacting the world around us.

The key to successful sustainable investing is research, research, and more at the risk of sounding like a broken record.  Read white papers, analyze company financials, and read up on the industries your investments operate in.

You’ll also want to ensure that you understand your investments and track your total return to ensure you’re properly measuring your sustainable investment.

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