Green cars, green buildings, and even green presidential candidates are especially hot right now. Same goes for green investing. Nearly half of U.S. investors plan to invest in a green-themed company or mutual fund this year, according to an Allianz Global Investors survey released in January. Pennsylvania state treasury officials, for instance, said in February they'd be putting $55 million into environmentally friendly funds and companies this year.
But ecofriendly investing is hardly new to the i Winslow Green Growth fund. It's been publicly available since 2001, but Winslow Management founder Jack Robinson has been ferreting out profitable providers of ambitious environmental solutions since 1983. Fund comanager Matthew Patsky has his own long history of green-mindedness. The two have built Winslow Green Growth into a Morningstar five-star, small-cap growth fund with more than $344 million in assets and a five-year average return of 25 percent. Patsky recently talked politics and profits with U.S. News. Excerpts:
You were pretty vocal in 2004, advocating a John Kerry presidency for the health of the economy. Do those sentiments still hold true?
I am convinced that this president has been a disaster for the U.S. economy. I'm still convinced of it, and I think that the declining dollar and the declining buying power for the average American has been just disastrous. But people don't focus on it, so nobody seems to notice.
Have you seen any particular detriment done to green companies?
Macro forces, macro events, have driven incredible demand for green products and services. Globally, growth is good. On environmental policy, the U.S. government has attempted to backpedal and reduce enforcement actions where there is still law in place, to a point where, rightfully, if this was the only market and there weren't countervailing forces, we would have had a miserable 7½ years of performance. What's happened is the states and municipalities have stepped up. The population has shifted in its attitude.
What has the green movement meant for investors? Can green investing now be a pure moneymaking strategy?
It's providing acceleration of growth in a lot of the sectors we're investing in. So yes, you can make money in it. But the idea that you can't make money in it is a 20-year-old argument, that if you do anything other than try to maximize profit in a portfolio, you're going to necessarily hurt your returns. It's an old argument, and it was true. The old [socially responsible investing] movement that came out of the antiwar movement was about not buying armaments, not buying anything nuclear, not buying tobacco, not buying alcohol. Taking whole sections of the economy and saying, "I'm not investing in that, because that's just bad." It was a moral argument.
It's a different approach than we've had. Our whole approach has been that environmental impact has effect on the sustainability on a company. The less impact a company has on the environment and the more they move to reduce their impact on the environment, the more sustainable the company will be and the better the shareholder returns should be over time. And that premise was completely ludicrous to the vast majority of the investment community in 1983. Doesn't look so ludicrous now.
Unlike most SRI funds, you invest in small caps. Why?
Because we're not doing negative screening, we're doing more positive screening. We're looking at what a company does and we're saying, "We like this company." We're not looking at a company saying, "Interesting financial characteristics, and it doesn't fall out because of our negative screen." So we don't end up with a portfolio filled with Johnson & Johnson, Merck, and Microsoft. The portfolios of SRI funds are just chock-full of S&P 500 behemoths that didn't offend anybody too much.
Our focus has been on picking companies that are part of a solution. What I'm looking for is a portfolio of small-cap growth opportunities in the U.S. market that are environmentally responsible or are part of an environmental solution. That universe has exploded with opportunity. There are so many more names that are public that are part of the environmental solution side. So many more renewable energy stocks, conservation stocks, energy-efficient lighting, geothermal, building and systems controls [stocks].