Investment Strategies
Social Impact Investments Inc. focuses on long-term growth and aims to hold positions for 1+ years (often indefinitely) while regularly re-balancing to remain in line with the account goals and risk profile. The typical portfolio is primarily comprised of a mix of US and international equities and a blend of market, sector, commodity, and bond ETFs for diversification. The allocations of each depend on the client’s objectives and risk tolerance for the account.
Methods of Analysis – Asset Selection
SIII extensively researches a security using both fundamental and quantitative analysis before investing any funds. This includes looking at a firm’s balance sheet and other financial statements, comparing financial ratios, reviewing third party analyst reports and performing intrinsic value calculations. The research is aimed at identifying equities that will likely outperform the broad market in the long run with a selection process that includes:
- Fundamental Screen – does the company have a healthy balance sheet?
- Cash Flow Analysis – is the company increasing revenue, increasing efficiency, etc?
- Growth Projections – how will the company grow in the next 3-5 years?
- Intrinsic Valuation – does the market over or under-value the company?
Methods of Analysis – Portfolio Managment
SIII conducts two levels of portfolio management during initial allocation and ongoing maintenance. First by overall allocation (stocks, bonds, cash) and then by the the weighting of individual equities within the stock portion. The initial allocations are set to meet the account objectives and risk tolerance preferences of the investor. This is evaluated by calculating the proposed portfolio’s expected beta, alpha, Sharpe Ratio, and standard deviation. The portfolio is then monitored and re-balanced to maintain allocations within an acceptable range.