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ESG Portfolio Construction

A Guide to ESG Portfolio Construction

In this article, the authors explore six quantitative environmental (E), social (S), and governance (G) strategies to provide insights into best practices for ESG portfolio construction. These strategies offer different approaches to the trade-off between desired ESG attributes and investment performance. They conclude that fully understanding the dynamics of these trade-offs will allow investors to select the strategy that best matches their ethical and financial views.
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  • Mark Bateman Nancy Malik Publishing Our Diversity Data to Promote Transparency by Mark Bateman & Nancy Malik As many of you likely have seen on our website, Aperio is Latin for “to make clear, to reveal the truth.” We looked in Google translate and found a definition we like even better: “disclose to view.” Aperio has always been a proponent of transparency...
  • Patrick Geddes Aperio’s DEI Journey: Putting Cash to Work with Impact by Patrick Geddes In June, we posted our “Statement on Racism” and said that we were developing plans on what Aperio could do to help move toward racial justice. Through these blogs, we’re sharing our journey...

Aperio’s DEI Journey: Putting Cash to Work with Impact

Patrick Geddes
Aperio’s DEI Journey
by Patrick Geddes
October 27, 2020

In June, we posted our “Statement on Racism” and said that we were developing plans on what Aperio could do to help move toward racial justice. Through these blogs, we’re sharing our journey—what we are learning and how we are holding ourselves accountable.

Our plans involve three components: our people, our vendors, and the assets we steward on behalf of our clients. Over the past summer, we looked at our company’s cash management and explored options for deploying it with greater impact.

As interest rates at money market mutual funds have dropped to near zero and banks are now paying a slightly higher rate, we searched for a good alternative for excess cash to our previous money market fund. A few additional considerations defined this search: Firstly, given our focus on risk by switching to banks or credit unions, we had to keep our deposits to the $250K Federal Deposit Insurance Corporation (FDIC) limit at any one institution. Secondly, we needed to find a depositary institution with one-day access to cash that would be low hassle. Furthermore, we wanted to find a vendor with social impact.

Brad Harrison, the Managing Director of Tiedemann Advisors, with whom we have worked closely, introduced us to an interesting solution: FICA® Impact, an account offered by StoneCastle Cash Management. FICA Impact, a liquid FDIC-insured cash deposit account, disperses cash to community banks. Working with more than 700 institutions across the United States, StoneCastle provides these banks with cash deposits that they can then use to make loans to local enterprises.

Aperio partnered with StoneCastle President Eric Lansky to deploy our working capital to smaller banks across the country. We see this choice as an optimal opportunity that balanced effectively all of our needs regarding interest rate, risk, hassle, and social impact.

Aperio has also made FICA Impact available to our employees, if they wish to take advantage of this type of account for their personal finances.

In all areas of our business, we are learning to pause and ask: is there an option that is better for all? The answer to that question translates to whom we hire, where we do business, and how we steward assets. We are happy to share further details of our thinking around this decision.

 

Aperio is not endorsing the use of StoneCastle as necessarily appropriate for its clients as client cash needs may differ and each investment decision for a client must be considered individually.

Instead, the firm is illustrating the choices we are making for our own cash management needs that we believe are consistent with our values.

Send questions or comments to blog@aperiogroup.com.

This article is provided for informational purposes only. The information contained within this article was carefully compiled from sources Aperio believes to be reliable, and it is accurate to the best of our knowledge and belief. However, Aperio cannot guarantee its accuracy, completeness, and validity, and cannot be held liable for any errors or omissions. All information contained herein should be independently verified and confirmed. Aperio does not accept any liability for any loss or damage whatsoever caused in reliance upon such information. Aperio provides this information with the understanding that it is not engaged in rendering legal, accounting, or tax services. In particular, none of the examples should be considered advice tailored to the needs of any specific investor. Aperio recommends that all investors seek out the services of competent professionals in any of the aforementioned areas. With respect to the description of any investment strategies, simulations, or investment recommendations, Aperio cannot provide any assurances that they will perform as expected and as described in this article. Past performance is not indicative of future results. Every investment program has the potential for loss as well as gain. You cannot invest directly in an index.