An Investment Program Consistent with Our Values

Lisa M. Laird, CFA, is an institutional investor and Seva board member. Previously, Lisa was the Chief Investment Officer of Providence St. Joseph Health and a Towers Watson consultant.

Seva’s board had long aspired to reflect the values of the organization in its investment portfolio through social screening, not holding the stock of companies deemed objectionable (e.g., fossil fuel, tobacco, etc.). Unfortunately, given our size, a cost-effective socially screened option was not available, and the board decided to invest Seva’s assets in a low-cost passively managed target-risk fund. The purely passive implementation kept costs low but meant that Seva could not eliminate certain objectionable securities from its portfolio holdings.

In 2018, Seva received a sizable bequest which increased its investible assets meaningfully, although the portfolio is still small by institutional investment standards.  At the request of Dr. T. Stephen Jones, Seva co-founder, honorary lifetime board member, and fossil fuel divestment advocate, a search was again conducted to identify an option that would allow for screening. This time though, another option was identified. Rhumbline Advisers (“Rhumbline”), a Boston-based investment firm, offered to create a custom strategy that substantively mimicked the risk profile of Seva’s existing investment program but would allow for social screening. The customized strategy consists of three accounts to be held at a custodian bank: a US equity separate account, a non-US equity separate account, and a US fixed income strategy. The two equity accounts are socially screened. The fixed income strategy is invested in an Exchange Traded Fund and is not socially screened.  Rhumbline has the authority to rebalance among the asset classes in accordance with guidelines determined by Seva’s board.

Seva’s board elected to eliminate the producers and manufacturers of fossil fuels, tobacco, guns and ammunition, and prisons from its investment portfolio. Although the implementation of this strategy is more complex than buying and selling a mutual fund, our investment costs have not increased. The new investment program has been in place for nearly a year now, and we are pleased to report that the strategy is performing very much in line with expectations. The board is delighted that the organization’s values are now a part of the investment program!

Lisa Laird

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