Now, I’ll save the nitty-gritty bits of the vegan investing process for another time, but the main thing that restricts financial advisers from working with vegans is that they simply do not know how to create such a non-diversified portfolio and still gain returns comparable to the stock market. As my post yesterday on focus investing suggests, it is not only possible to earn money without a diversified portfolio but long-term it can be exceptional if you effectively manage risk.
That being said, what exactly CAN a vegan add to a portfolio and just how restricting is the diversification process?
In the chart below, I break out each financial sector is terms of its relevance and the likelihood that it could be included in a vegan portfolio. The green arrows represent stocks that have very few personal limitations in terms of conflict with worldviews, the yellow arrows imply that more scrutiny should be used in determining a match with the investor’s worldview, and the red arrows should generally be avoided altogether unless the investor wants to zero-in on specific companies in these sectors. Obviously, every investor is different and no-two vegan portfolios will look alike, but this is a broad guideline to help you get started:
As you can see, it can be incredibly limiting, but this is why keeping the screening factors specific and ready are incredibly important. In the coming weeks, we’ll talk about each individual stock sector and its implications for specific worldviews (i.e. religious restrictions, dietary, ethical, moral, anti-industry, etc.).
Ultimately, I like when a person’s worldview can be filtered through to all aspects of their lives. This is what socially responsible investing is all about, and it is something that all investors – no matter your age – should seek to achieve.
I recently gave a professional presentation on the importance of embracing the challenges associated with developing investment portfolios that reflect very specific worldviews – namely vegans, who possess one of the strictest worldviews just based on its definition. Now I know what you’re thinking, “Jenny, when did you become a vegan?” Relax. I am not a vegan nor do I have any immediate plans to become one. However, I’m always fascinated to learn about all the things that I am not, and knowing that I have quite a few vegetarian/vegan friends, I wanted to be able to create an investing process that would work for them and their lifestyle.
