Swell Investing makes impact investing easy with professionally-managed portfolios and no trading fees
I’ve just recently gotten into impact investing, trying to force social and environmental change with my investments. Even with a decade of experience as an investment analyst, I wasn’t sure I knew where to start.
Impact investing had all of about a page in the curriculum for the Chartered Financial Analyst (CFA) designation when I was a candidate. I’ve since analyzed hundreds of companies for institutional and individual investors but never paid much attention to the environmental, social or governance factors in the decision.
That’s why I turned to a new investing platform, Swell Investing, when it came to putting my money to work in the theme.
What is Impact Investing?
To understand why the new investing platform is important, you have to know a little something about impact investing.
Impact investing, also called sustainable investing and socially-responsible investing, is an investment theme that gives investors the power to create important social changes while putting their money to work.
I posted a full review of socially-responsible investing last month. In SRI, you’re looking to invest in companies that set a higher standard for environmental and social actions. These are companies that promote safe environmental practices and the social good.
Why is impact investing important? Why not just make as much money with your investments and not worry about the consequences of the corporations in which you invest?
Why not do both?
By incentivizing companies to be good corporate citizens through your investments, you can earn a solid return and help leave the world a safer place for your children. Think of it this way, you meet your financial goals and don’t leave future generations with an unbearable environmental bill at the same time.
What is Swell Investing?
Swell Investing is an online investment platform. The site is regulated by the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA). All investments held on the site are protected up to $500,000.
Swell Investing was created with a mission to make impact investing possible for Main Street investors.
We believe performance is about more than just profit. Swell is on a mission to ensure that every person can have an impact while also investing in their financial future.
CEO Dave Fanger
Unlike other investing sites, where you have to pick individual stocks, Swell Investing is a portfolio investment platform. The company has its own in-house team of professional analysts that put together portfolios of stocks around one of six impact investing themes.
Investors put their money in one or more of the portfolios, getting instant diversification across the theme and pay no transaction costs. The only fee is a 0.75% annual management fee. That’s a fee of $3.75 a year on a $500 investment and no trading costs.
What Swell Investing is doing for Sustainable Investing
Sustainable investing isn’t new. What is new is how Swell Investing helps Main Street investors find the best stocks in the theme and invest at the lowest cost.
Through its Portfolio Manager, Mike Skillman, the platform identifies innovative companies in the impact investing theme to fill one of six portfolios. Mike has over 25 years’ in asset management for mutual fund investors, previously as the CEO of Cadence Capital Management at Pacific Life.
The impact analysis team at the company uses a proprietary set of criteria to screen companies’ environmental, social and governance standards. It then analyzes each company’s fundamentals and outlook to fill the portfolios with smart investments that are also socially-responsible.
This gives Swell investors the kind of professional investment advisory that isn’t available to the average investor. There are no stock screens yet to find companies in the sustainable investing theme. Even if there were, you would still have to do the deep-level analysis of the companies to find the best of breed leaders.
Swell Investing does it all for you. Each of the six impact investing portfolios holds shares in dozens of the best investments in the space.
Five of the six portfolios have beaten the Russell 3000 index of stocks since inception. That’s a solid record for any portfolio manager. Swell investors get all this for just a management fee of 0.75% per year, with no other fees to pay.
My Impact Investing Portfolio of Stocks
I’ve been interested in the idea of impact investing for a while now. My experience as an equity analyst isn’t in the theme so I wasn’t quite sure where to start. I’ve spent my fair share of time building cash flow projections and analyzing financial statements but never the environmental or social impact of firms.
Investing on Swell seemed like a great way to get started in impact investing and make a difference while I invest, so I opened an account last August. I wanted to test out all six portfolios before I put more money to any specific one so I just spread my initial $500 across the board.
The stocks in the portfolio haven’t disappointed with the group already beating the larger market index of stocks. I’ll update the blog with my returns and analysis each quarter.
How to Get Started on Swell Investing
It took me less than five minutes to open my account on Swell Investing. Linking my bank account was done within a day and I was investing within 48 hours.
The first thing you’ll do is answer a few questions about your investing goals and needs. This is mostly to help the system recommend portfolios for you but doesn’t limit your choices. If you want to target a specific theme in impact investing, you can choose it from the list or just select them all.
Next, you’ll fill out contact information for your account and answer a few legal disclosures. These are the same you’ll see on any investing account like, “Are you a director or insider in a publicly-traded company?” Brokers have to ask these questions to make sure company insiders aren’t trading illegally.
You’ll link your bank account to deposit funds. The platform verifies your bank account with two small deposits. After you verify the deposit amounts to confirm your account, you’re all set to go.
The site is extremely easy to use. There are six portfolios in which you can invest; Renewable Energy, Clean Water, Zero Waste, Disease Eradication, Healthy Living, and Green Tech. You can click through to see the stocks held in each and download a fact sheet.
Each portfolio holds dozens of companies within its theme, companies setting the standards for environmental and social change. You invest only in the portfolios you choose.
I split my initial investment evenly across all six portfolios as a way to get a feel for each before I invest more in a select few. So far, I’m leaning to Green Tech and Disease Eradication as favorites. These two themes have strong demographic and environmental drivers ahead of them and I think they will do well over the coming decades.
Swell Investing recently lowered its account minimum to just $50 so anyone can open an account and test it out. It’s a great way to get started with impact investing to see how it fits with your investing goals.
I did have one complaint about Swell Investing, that there are only six portfolios from which to choose. While the portfolios hold over 320 companies across the six impact investing themes, I would like to see a few more themes in which to invest. The company is growing and I would bet that adding more portfolio choices is on the horizon.
Swell Investing is the first professionally-managed portfolio platform for impact investing. Instead of having to spend hours analyzing companies on their own, investors can invest in ready-made portfolios across six sustainable investing themes for one low management fee. If you’ve ever considered socially-responsible investing, or if you just want to meet your financial goals while also helping to force real change, check out Swell Investing.