Sustainable Returns in Unsustainable Times
HIP Investor’s Strategies and Portfolios have been designed to support higher-impact portfolios. If you would like to build a better world, reduce future risk, and seek strong returns, then HIP Strategies and Portfolios can be part of your investment allocations. Our HIP methodology prioritizes the factors that benefit people, sustain the environment, and strengthen society – in concert with higher potential for profit growth, lower volatility, or both. In these uncertain and unsustainable times, HIP Strategies and Portfolios provide a path towards more resiliency and strength for your long-term financial goals.
Following is a summary of the 2017 and cumulative performance of the 5 HIP Strategies, with multi-year track records ranging up to 8 years.
The HIP Great Place To Work ESG Portfolio
CEOs proclaim repeatedly that employees are the firm’s greatest asset. Yet employees continue to be treated as expenses, and not assets. Employee retention and employee satisfaction are strategically important metrics, but frequently excluded from quarterly earnings calls. As the economy becomes less extractive, people and their skills to innovate, lead and manage become more important.
The HIP “Great Place to Work” portfolio, whose constituents Fortune magazine highlights annually for best workplaces for employees, then weighted and screened by HIP Impact Ratings, invests in those companies where employees feel valued and rate those firms highly from personal experience. Valued employees create value, not only in their lives but also for the bottom line.
In 2017, the HIP Great Place to Work portfolio trounced the benchmark, realizing gross returns of +34.2%*, outperforming the benchmark by more than +13 percentage points*, or a 50% premium*.
The +34.2% gross return* this year was driven by many companies, specifically VMWare (VMW), Novo Nordisk (NVO) and Allianz, who consistently innovate in their markets. All three returned more than +40%* last year and are in the top deciles of HIP Impact Ratings.
The HIP + Great Place to Work ESG Portfolio can be allocated to Equities, Global Equities, and Multi-Cap segments, and generally rates as industry-leading ESG (HIP) performance. (*denotes before fees)
Click Here For: The HIP Great Place To Work ESG Portfolio Performance 2-Pager
or Here For: The HIP Great Place To Work ESG Portfolio Brochure
The Fossil Free HIP 100 Exclusion Portfolio (Large-Cap Core SRI)
In a year where the US announced plans to leave the Paris climate accord and stock returns were at an all time high, fossil fuel companies managed to stop the bleeding and make up some of the lost ground of the past 3+ years, especially as oil prices stabilized. Oil and gas producers, however, still lagged the S&P100 markedly.
The Fossil Free HIP 100 Portfolio managed to outperform the S&P100 by +1.24 percentage points*, continuing to position against the extractive fossil-fuel energy chain. After a year of extreme climate, from wildfires and mudslides in California to hurricanes and snow in Texas, the human and economic cost of fossil fuel production and consumption is as evident as ever. We expect these costs to reflect more and more on the bottom-lines of fossil fuel companies and associated future financial risks.
On the upside, medical equipment and pharmaceutical companies like Abbott Labs (ABT) outperformed and created shareholder value while improving quality of, and access to, healthcare.
Other winners are electronics hardware companies like Intel (INTC) which support a more technology oriented economy, one less resource extractive, delivering +30.24% returns for investors*. 2017 was again a strong year for investing in sustainable and impactful companies.
The Fossil Free HIP 100 Exclusion Portfolio, nearing a 6-year track record, can be used as a Large Cap Core allocation, with an ESG (HIP) focus, and selected SRI exclusions of 30+ companies in energy, mining, metals, banking, and industrials. (*denotes before fees)
In a very strong year for the stock market, our HIP 100 Portfolio – which re-weights the S&P100 towards more sustainability and profit potential – realized a gross return 19.94% for 2017; the average of net returns can be seen in the chart below and vary based on which platforms and advisors you use.
Since the HIP100’s inception in July 2009, more than 8 years ago, the gross return has exceeded the S&P100 benchmark by more than 1% every year (or 100 basis points)*. In 2017, while the market rallied our sustainably weighted HIP 100 performed well in the first half of the year yet lagged in the second half of the year as more un-sustainable and extractive firms rose faster.
For the HIP 100, especially strong sustainability leaders were Texas Instruments (TXN) with a +46.03% return* and Abbott Labs (ABT) with +51.34%*. The healthcare sector as well as the technology and software sector excelled again in 2017, with only Merck (MRK) proving to be a disappointment with a loss of -1.21%*. (*denotes before fees)
The HIP 100 can be used as a Large Cap Core allocation, with an ESG focus.
Click Here For: The HIP 100 Portfolio (Large-Cap Core ESG) Performance 2-Pager
Sustainable and resource efficient housing, office space, and data centers are of central importance. Smart real-estate design spurs employee innovation and productivity, saves energy and water, and keeps rents stable, especially while facing the challenges of urbanization and more extreme weather.
The HIP Sustainable Real Estate Portfolio (HIP REIT) invests in leaders in sustainable housing, offices, data centers, health care facilities – and not in private prisons or other negative-impact firms. Investors seeking income as well as impact, while diversifying into real-estate for the portfolio, use the HIP REIT Portfolio.
This higher yield generates income, as well as impact. While 2017 total return underperformed the benchmark in 2017, our strategy still secured +7.05% return* and secured a yield of +4.5%*. Based on a very strong performance of +11.58%* in 2016 the portfolio is still outperforming the benchmark across a 5-year timeframe.
Jones Lang LaSalle (JLL) is one of the leaders on sustainable housing and managed to save over 200.000 metric tons of CO2 emissions in 2016. JLL leadership on sustainability translated into returns of +48.11%* in 2017.
The HIP Sustainable Real Estate Portfolio (HIP REIT) can allocated to an Alternatives segment or Real Estate segment of your portfolio, and has an ESG (HIP) focus, with a yield typically of 4%*. (*denotes before fees)
The HIP Sustainable Global Dividends Portfolio seeks out globally focused companies listed in the US as stocks or ADRs (American Depository Receipts) with a yield of 3.5%* and up.
With +15.36% returns in 2017, this lagged some dividend-focused benchmarks, but was competitive with international benchmarks. While prices fluctuate, this impactful portfolio yields a strong dividend rate of +3.84%* as of 12/31/2017, outperforming the benchmark on yield.
Especially strong in the dividends strategy were Hewlett Packard with +45.2%*, AstraZeneca (+32.14%)* and Vodafone (+37.48%)*. GlaxoSmithKline underperformed in an up market (-2.53%)* but delivered a strong dividend yield of +5.6%*.
The HIP Sustainable Global Dividends portfolio is for international allocations or global equities, and can yield income as well as impact (ESG, HIP). (*denotes before fees)
HIP Strategies and Portfolios are available to investors:
- On Schwab Institutional via an independent registered investment adviser (RIA), or from HIP.
- On Folio Institutional via an independent registered investment adviser (RIA), such as:
** Financial returns after fees can vary by investor and advisor platform. Fees are disclosed to investors for advisory, brokerage and custodians. After-fee performance of HIP Strategies is reported transparently.