Well-intentioned but poorly implemented SRI funds can backfire, argues Christian Ryther, founder of Curreen Capital and a former analyst at NeuStrada Capital, where he solely managed a $250 million fund affiliated with Farallon Capital Management from 2010 to 2013.
Mr. Ryther also candidly and plainly says why he does not like like SRI and ESG, sharing the main reasons include high fees which do not merit the returns “promised” by SRI funds, and the unintended consequences that SRI may cause to “sin stocks” should large amounts of capital cause sin stock share prices to plummet.
Our TakeOur Take
There is ample value in what Mr. Ryther is suggesting.
We covered how negatively excluding sin stocks tend to influence repurchases (i.e. buybacks) of shares at lower prices that actually end up helping these types of firms.
Also, a closer look at some so-called “Green” ETFs’ holdings suggest that not all shares being held are, in fact, green so the investor may be unintentionally investing in some stocks that do not meet their sustainability requirements yet are paying a premium either in high fees or lower adjusted returns. Investor due-diligence is key.
Source: Curreen Capital
