Investing Socially: Aligning Your Portfolio and Your Values

Socially responsible investing, which lets you align your portfolio with your values, has grown in popularity in recent years, bolstered by product innovation. Learn more here.
5 min read
Photo by Getty Images

Key Takeaways

  • Consider investing in companies that reflect your values and beliefs
  • Choose socially responsible investments that align with your financial goals
  • Use third-party research and other tools to help narrow down your choices

Socially responsible investing (SRI) has grown significantly in the past several years as many investors seek to align their portfolios with their beliefs, according to a report by US SIF: The Forum for Sustainable and Responsible Investment, which indicated SRI investing grew 33% from 2014-2016. These individuals believe targeting investments that match their values may help make a positive difference in the world (or, at minimum, avoid having a negative impact).

But investing is also about maximizing risk-adjusted returns to help you pursue your goals. Ideally, you’d like to invest socially without sacrificing returns in the process. In other words, the sustainability mantra “doing well by doing good” applies to the socially-minded investor. 

"We support a client's desire to do greater good with their investing," says Joe Correnti, Director of Portfolio Construction and Guidance at TD Ameritrade. "And we'll work with them to help find a investment solution that also makes sense for their financial situation."

Social Investing in a (Biodegradable) Nutshell

This type of investing may be religious-based – there are mutual funds and exchange-traded funds (ETFs) that focus on tenets aligned with Christianity, Islam or Judaism. Many of these start by screening out stocks like alcohol, tobacco, firearms, and pornography. Additionally, environmental, social and governance funds, known collectively as ESG, may invest to promote the environment, social values like women’s education, or better corporate governance.

Measuring Value; Measuring Impact

There are numerous SRI and ESG mutual funds and ETFs covering most major asset classes, including target date, global real estate, stocks, and fixed income securities. So you could potentially make your entire portfolio ESG-based. You might also choose to invest in specific companies or sectors that focus on social and environmental issues. 

Building an SRI or ESG portfolio involves looking not only at the typical factors like your risk tolerance, time horizon, and investment objectives, but also identifying which companies or funds may support your causes. To help you with this, you may want to consider third-party research, possibly from Sustainalytics, Thomson Reuters, or MSCI. For example, the MSCI ACWI Sustainable Impact Index is designed to identify companies that earn 50% or more of their revenue from sustainable impact solutions that address one of five themes: basic needs, empowerment, climate change, natural capital, and governance.

Are There Performance Trade-Offs?

In investing there are always opportunity costs – investing in one asset means less money available for another. When investors don’t get broad market exposure they could miss out on rising sectors. In a white paper, Jon Hale, director of sustainable research at Morningstar, says sustainable investments performance is often debated, but most of the research suggests no performance penalty with SRI investing, and there could be “possible avenues for outperformance based on reduced risk or added alpha.” Hale noted for 2017, 54% of sustainable funds as a group ranked in the top half of their Morningstar Category for the year, and that the group overall has performed similarly in the past three calendar years. Of course, past performance is no guarantee of future results.

Hale notes fees for sustainable mutual funds are competitive with traditional mutual funds, but fees for sustainable ETFs are usually higher than average ETF costs.

Echoing Correnti's earlier comments, Rocio Ortega, partner and associate advisor at WE Family Offices, who has clients who want sustainable investments says investors need to evaluate SRI and ESG funds just as they would any other investment. It takes an extra step because the investment has to also align with the values and goals of the client. "Because at the end of the day, these investments have to make financial sense,” she says.


Key Takeaways

  • Consider investing in companies that reflect your values and beliefs
  • Choose socially responsible investments that align with your financial goals
  • Use third-party research and other tools to help narrow down your choices
Call Us

Do Not Sell or Share My Personal Information

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

Carefully consider the investment objectives, risks, charges and expenses before investing. A prospectus, obtained by calling 800-669-3900, contains this and other important information about an investment company. Read carefully before investing.

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.

All investments involve risk, including loss of principal. Past performance does not guarantee future results. There is no assurance that the investment process will consistently lead to successful investing.

ETFs can entail risks similar to direct stock ownership, including market, sector, or industry risks. Some ETFs may involve international risk, currency risk, commodity risk, and interest rate risk. Trading prices may not reflect the net asset value of the underlying securities. Commission fees typically apply.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2023 Charles Schwab & Co. Inc. All rights reserved.

Scroll to Top