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Apr 2022

Sustainability Update

By Mike Leavy, CFA, Kay Oh

While many small businesses continue to face challenges from the lingering impact of the COVID-19 pandemic, 2021 was a year Integris spent recommitting our values towards the difference we want to make in our community. It has often been said that by taking care of your people, you are taking care of your business. In 2021, Integris was able to maintain a thriving workplace by:

  • Creating health and safety policies to keep employees safe as they return to the office
  • Relocating to a more functional office space
  • Embracing technology upgrades to maintain operational stability
  • Avoiding layoffs or salary reductions
  • Expanding healthcare options for employees
  • Expanding 401(k) features
  • Supporting a culture of collaboration despite remote work

On a similar note, many of our clients have expressed an interest in doing what they can with their investments to “do good” – to support their values – while still having their money work for them to support their financial stability. Our research showed that over the past five to ten years, there has been a vast expansion in quality, low cost investment opportunities that screen for good corporate behavior on environmental, social and corporate governance (ESG) issues. With the advent of these new opportunities, in early 2021 we responded to client interest by developing an ESG offering that retains the quality of our traditional investment approach. In our ESG offering, we include ESG-focused investment funds from two companies that we hold in very high regard, Blackrock and Dimensional Fund Advisors (DFA), who have put significant resources into developing great quality, low cost ESG investment solutions.

Sustainability Impact

While the criteria used to overweight investments in “good” companies and underweight or eliminate investments in “bad” companies span the environmental, social, and governance categories, one of the most measurable areas of impact is in the environmental area.  We estimate that with our preferred asset allocation, a Moderate Growth ESG portfolio, with about 60% in growth assets like stocks and 40% in high quality bonds, has roughly 43% less exposure to carbon emissions than a comparable traditional portfolio.  Overall, our ESG portfolio is estimated to have a 66% concentration in companies considered to be “ESG Leaders,” compared to 53% for our traditional portfolio.

Performance

Investing in an ESG focused portfolio allows you to do good… but are you also doing well, or is it costing you investment performance? Below are estimated historical returns that would have been earned over the recent past in a Moderate Growth traditional versus ESG portfolio. Please be aware that these results are “pro forma” in that they do not represent an actual invested portfolio over these periods. See Disclosure section below for more information.

Performance as of March 31, 2022

YTD

1 Yr

3 Yr

Traditional

-4.3%

1.8%

7.3%

ESG

-5.2%

0.4%

7.4%

Fund returns will differ, as an ESG focus has added selection criteria.  However, given the balanced nature of the investments we have chosen, our ESG focused portfolios will retain the tenets of broad global diversification, low cost, and style consistency that are the cornerstone of our investment strategy.  In these strategies, we continue to apply our approach of determining an appropriate risk profile for each client, and systematically rebalancing to that profile, so as to remove emotion from the process and lend stability to the expected portfolio returns over time.

The bottom line is that with a well-structured, carefully crafted ESG-focused portfolio, we expect you to be able to do well – while doing good.

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Disclosure

Integris Wealth Management, LLC (“Integris”) is a registered investment adviser registered with the Securities and Exchange Commission, and is located in Monterey, California. Integris and its representatives are in compliance with the current filing requirements imposed upon registered investment advisers by those states in which Integris maintains clients. Integris may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Information in this document is obtained from sources which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user.

Please be aware that past performance is not indicative of future results. Investors should consider the investment objectives, risks, charges and expenses of Integris carefully before investing. The Integris ADV contains this and other information about the firm. An ADV can be obtained by contacting Integris at 831-333-1717 or by visiting the Resources\Public Disclosures section of our website: http://www.integriswealth.com/legal/

Pro Forma Returns: Returns shown are pro forma returns, and do not represent an actual investment return earned by a real, invested portfolio. Pro forma returns used are total returns, which include any increase or decrease in market price and reinvestment of all dividends and interest earned on any investments. Pro forma returns are generated by taking the actual returns generated by specific mutual funds and exchange traded funds that we generally use when investing for our clients, and assuming that a particular allocation is made between those funds; and further assuming that the asset allocation is rebalanced on a quarterly basis back to its original target allocation. While the returns of the underlying funds include the effects of management fees paid to the investment manager of those funds, the pro forma calculation does not take into account the effects of any trading fees or market impact that may be experienced when rebalancing, and no deduction is made for fees that would be charged by Integris. Additionally, pro forma returns look back to a period prior to when we designed the target asset allocation used in the creation of the pro forma return history, and thus are subject to the benefit of hindsight.

Third Party Research: Opinions expressed herein and comments related to market and economic conditions may draw upon analysis and commentary of third parties. In particular, we have referenced research done and presented by Dimensional Fund Advisors, Blackrock, and Vanguard, and MSCI.

Individual account performance will vary according to the date of initial investment and the amount and timing of contributions and withdrawals. Investment return and principal value will fluctuate, so that your investment, if sold, may be worth more or less than the original cost. Investing in non-U.S. securities may entail higher risk due to non-U.S. currency fluctuations and political or economic uncertainty that may be especially heightened when investing in emerging markets. Diversification does not ensure against loss. All investments involve a risk of loss.

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