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Robo Attempts to Balance Ethics and Investment Returns

December 27, 2017

A digital investment platform subsidiary of Pacific Life Insurance Co. is trying to satisfy millennial desires for socially responsible investing while delivering benchmark-beating returns. And so far it seems to be succeeding, Bloomberg writes.

Swell Investing, incubated by Pacific Life and now also its subsidiary, according to the company’s website, offers several portfolios aimed at such ethical investing targets as green technology, disease eradication and clean water, the news service writes. But while the idea of environmental, social and governance investing isn’t new, Swell’s portfolios differ from most currently available ESG funds, which often include companies that can be seen as contradictory to their stated goals, Bloomberg writes.

The Fidelity Select Environment & Alternative Energy Portfolio, for example, claims to invest in firms tied to pollution control, energy efficiency and water infrastructure, but its largest allocations are to 3M Co., Deere & Co. and Honeywell International Inc., Bloomberg notes. The iShares MSCI USA ESG Select Social Index ETF, meanwhile, holds Microsoft, Accenture and BlackRock, according to the news service.

Swell, on the other hand, takes large stakes in firms such as Whole Foods Market Inc., Tesla Inc. and Lululemon Athletica Inc., Bloomberg writes. What’s more, while the S&P 500 Index rose 17% over the past year, Swell’s green technology portfolio is up close to 30%, its zero waste offering is up 16% and its clean water option rose 21%, according to the news service.

Swell’s minimum is just $500 but the annual fee is a rather steep at 0.75%, according to the firm’s website and Bloomberg’s appraisal of the fee.

The company offers both regular accounts and individual retirement accounts, according to the website.


Swell’s share of the ESG market is “tiny,” Bloomberg notes — despite it being around for close to two years. Swell was founded in January 2015, seeded in September 2016 and started operating in beta in January 2017, according to L.A. Biz.

It currently has around 2,000 clients and manages just $13 million, Bloomberg writes. ETFs with an ESG focus, meanwhile, have less than $8 billion, which in itself is just 0.2% of the market, according to Bloomberg data.

By Alex Padalka
  • To read the L.A. Biz article cited in this story, click here.
  • To read the Bloomberg article cited in this story, click here.