Socially Responsible Investing (SRI), Revisited

I blogged a bit recently on how I see SRI, and wanted to use the linked story, involving alleged "improper foreign payments", aka bribes I guess. I admire J&J for its exemplary corporate citizenship history, and overall excellence in how it runs its business activities. But even when you screen out from your portfolio the "usual suspects", like Altria, or whoever, you will see things like this story on any given day. The lure of big money, and shortcuts to career advancement, to power can be more than many highly-credentialed individuals can resist. And in my book such behavior is more corrosive to your financial outcomes as an investor than whether your portfolio holdings run problem businesses.

Make no mistake, if you invest using single company stocks to build your portfolio, you can eliminate the companies you just cannot accept as personal holdings. But if you use mutual funds, either indexed or actively managed, to exclude Altria, for example, you just drastically limit yourself in terms of your choices and you will likely see significant performance degradation. There are enough things out there which can set you back financially, you do not need to add in any more, even in a well-intentioned way. Your retirement is at stake.



BBC NEWS | Business | J manager quits in fraud probe