It’s no secret that many investors are looking for more out of their portfolios. They want to do good while making a good profit. And in that, many have turned toward blending their portfolios and morals together.
Dubbed Socially Responsible Investing (SRI), many investors and investment managers have begun to screen for certain characteristics among environmental, social and governance (ESG) standards. Billions of dollars are now sitting in SRI- and ESG-focused funds. And while ESG returns are starting to live up to their hype, some sectors are naturally born winners in this space. One of the best sectors happens to be a favorite haunt of income investors.
It turns out that real estate investment trusts (REITs) are one of the best sectors to take advantage of everything ESG has to offer. For investors, that means not only doing good but also getting a market-beating return as well.
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Green Buildings Rule the Day
The approach of ‘profits with a purpose’ has been around for decades. But in recent years, SRI has gained an enormous following from a variety of investors both big and small. And as SRI has evolved, so has ESG screening. We’re no longer just kicking out ‘sin stocks’ like weapons manufacturers and tobacco producers. SRI portfolios and indexes are now marked by ESG metrics. You’re just as likely to find standards for how a firm treats its employees or how much carbon it emits as factors screened for.