When is an investment a good fit? Almost everyone considers whether an investment aligns with their long-term financial goals. They assess whether the risk is appropriate for their situation. But have you ever thought about what it means to own a company? Are there companies that you’d be proud to own? Are there other companies you wouldn’t be willing to invest in? How can you tell the difference when most of your portfolio is in pooled investments like mutual funds?

At OneAscent Wealth, we believe owning stock in a company matters, whether you hold that stock independently or in a mutual fund. To help investors who want to live aligned with their values, we identified four characteristics exemplified by companies that prove to be good investments, both in the returns they generate and their fit relative to your values.

First, a company must fill a need to be a good investment. Companies that fill a need are likely to thrive due to market demand. Whether a company builds widgets or provides a service, they have a leg up if they’ve identified an underserved market. 

Check out this excerpt from our eBook to see how some companies make our lives better! 

Second, companies demonstrate they are good investments by generating sustainable profits. Filling a need indicates opportunity. Sustained profitability is a sign of a well-run company with the leadership and discipline to fill that need with excellence. Some companies may choose to forego profits to invest in future opportunities. Others fail to generate profits because they lack focus and fiscal discipline. These companies are not good investments. 

Third, good investments generate a positive return for their shareholders. Positive returns are a key indicator that investors can expect the need this company fills and the excellence of their operations to continue for the foreseeable future.   

These three characteristics are factors in almost every investing strategy. But the fourth factor sets values-based investing apart.

Companies are a good fit for a values-based investing strategy if they exemplify the three characteristics described in the previous section AND bless humanity.

What does it mean for a company to bless humanity? Some companies positively impact the world in addition to meeting needs and making profits. They might provide global access to education, fund cancer research, or make the internet a safe place for children. But it could also mean they developed an innovation that streamlines global communications. Or a process that improves industrial efficiency. Any company that seeks to bless humanity could make all of our lives better. 

But some companies don’t. Companies that exploit the most vulnerable through abortion, pornography, tobacco, and gambling are harming humanity rather than blessing it. If those activities don’t align with your values, you might want to reconsider owning stock in a company that profits from such things. We don’t consider a company that engages in these activities to be a good investment even if they fill a need, achieve sustainable profit, and provide a positive return because of the negative impact on the world around us.

OneAscent has a team of investment strategists and managers that screen over 6,500 companies every quarter. We look at each of these four factors when determining which companies are a good investment based on a client’s values. 

Read more about our process here! 

Your values inspire the way you live. Shouldn’t they inspire the way you invest? Investors can thrive in both life and legacy if they consider these four factors when planning their investment strategy. To learn more about building your portfolio around what matters most to you, contact us today!

Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.