A growing number of robo-advisors are offering socially responsible investing (SRI) options as part of their investment offerings.
But there are only a handful of robo-advisors dedicated specifically to SRI. One of the most prominent is Swell Investing.
If you have a serious interest in SRI investing, this is the platform to do it. The investment performance of several of their portfolios is comparable to returns on the S&P 500. This proves that SRI investing doesn’t require accepting lower investment returns.
- Dedicated SRI platform.
- Very low initial investment $50.
- Choose your own portfolio mix.
- Fees a bit high.
- Mobile app only on iOS.
About Swell Investing
Swell Investing is owned by Pacific Life Insurance Company. Even though the company is new and fairly small, it nonetheless has the backing of a world-class financial company.
Based in Santa Monica California, the company began operations in 2015. With a focus on socially responsible investing, it centers specifically on areas like clean water, better waste management, healthy living, renewable energy, disease eradication, and “green” technology.
The job of managing Swell Investing’s portfolios is handled by CEO Dave Fanger and analysts Amberjae Freeman and Jake Raden. The three have nearly 40 years of investment experience between them.
The company is a registered investment advisor with the US Securities and Exchange Commission (SEC).
Swell Investing – The Basics
Minimum initial investment: $50.
Account types offered: Individual taxable accounts and traditional, Roth and SEP IRAs. Please be aware that the platform currently does not offer joint accounts.
Mobile app: Swell Investing does not currently offer a mobile app. It’s available online only.
Where your account is held: Folio Institutional is both the account custodian and clearing agent. It is a member of both SIPC and FINRA.
Customer service: Contact is available by email only – no phone number is provided on the website.
Swell Investing account protection: Your funds invested with Swell Investing are covered by SIPC, which insures your account against broker failure (not market losses) for up to $500,000 in cash and securities, including up to $250,000 in cash. SIPC coverage is provided through Folio Institutional.
Swell Investing account security: Swell uses bank level security measures in the transmission of all information. That includes encryption with 256-bit secure socket layer (SSL) protection.
How Swell Investing Works
Swell Investing functions as a robo-advisor in the way it manages your account. But it has several departures from typical robo-advisors.
First, each portfolio is invested entirely in individual stocks. There are typically about 50 stocks in each portfolio. They don’t use either mutual funds or exchange traded funds. They also don’t offer fixed investment options, like bonds or other income generating assets.
Swell Investing offers seven different portfolios. Six are dedicated to different areas of SRI. The seventh is something of a conglomeration of the other six. It enables you to invest in stocks in each of the six portfolios, without having to choose a single option.
The platform enables you to have a large measure of control over the specific investments in your portfolios. This again is a significant departure from the typical robo-advisor model. You can choose the allocation for each of the portfolios you invest in. In addition, you’ll have the option to remove as many as three companies from any portfolio you invest in, if you find them to be unacceptable for any reason. Swell Investing does not charge any additional fees for the removal of those companies.
In all other respects, Swell Investing functions like other robo-advisors. They provide complete portfolio management, including rebalancing to maintain desired portfolio allocations. Rebalancing takes place twice each year.
They also provide automatic dividend reinvesting. Dividends are held in your cash account until they reach $1. Once they do, they’ll be reinvested in your portfolio.
Swell Investing is able to allocate funds with very small amounts of money because they use fractional shares rather than whole shares. For example, your portfolio may consist of 1/10 of one share, and 1/20 of another. This enables a very small amount of money to be spread across dozens of stocks.
Swell Investing Investment Portfolios
Swell Investing is based on socially responsible investing, which forms the basis of portfolio construction and individual investment selection. Because this investment strategy is so specific, Swell Investing invests in individual stocks, rather than in exchange traded funds (ETFs). This is unlike typical robo-advisors that invest in specific asset classes, each represented by a single ETF.
Overall, the investment principles used in construction of Swell Investing’s seven portfolios are guided by the United Nations Sustainable Development Goals. There are 17 goals in total, and each company included in one of the seven portfolios must be aligned with at least one of those goals.
The 17 goals are as follows:
- No Poverty: End poverty in all its forms everywhere.
- Zero Hunger: End hunger, achieve food security and improve nutrition and promote sustainable agriculture.??
- Good Health and Well-being: Ensure healthy lives and promote well-being for all at all ages.
- Quality Education: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
- Gender Equality: Achieve gender equality and empower all women and girls.
- Clean Water and Sanitation: Ensure availability and sustainable management of water and sanitation for all.
- Affordable and Clean Energy: Ensure access to affordable, reliable, sustainable and modern energy for all.
- Decent Work and Economic Growth: Promote sustained, inclusive and sustainable economic growth, full and productive employment for all.
- Industry, Innovation and Infrastructure: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.
- Reduced Inequalities: Reduce inequality within and among countries.
- Sustainable Cities and Communities: Make cities and human settlements inclusive, safe, resilient and sustainable.
- Responsible Consumption and Production: Ensure sustainable consumption and production patterns.
- Climate Action: Take urgent action to combat climate change and its impacts.
- Life Below Water: Conserve and sustainable use the oceans, seas and marine resources for sustainable development.
- Life on Land: Protect, restore and promote sustainable use of terrestrial ecosystems, manage and combat desertification.
- Peace, Justice and Strong Institutions: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all.
- Partnerships for the Goals: Strengthen the means of implementation and revitalize the global partnership for sustainable development.
Each of Swell Investing’s portfolios are designed to maintain a moderately aggressive risk level.
They also attempt to limit positions for any single company to not more than 4% of the total portfolio value.
The seven portfolios offered are as follows:
This portfolio is based on the notion that renewable energy sources will eventually replace fossil fuels. A pipe dream just 10 years ago, it’s become more likely as the price of renewable energy becomes more competitive with more traditional sources. The portfolio is invested in companies focused on solar panels, wind turbines, and lithium batteries.
The Renewable Energy portfolio is comprised of 55 companies. Between September 30, 2016, and May, 2019, the portfolio has produced a return of 36.17%, compared to 39.83% for the S&P 500.
This portfolio invests in companies that are focused on energy efficiency, building desirable products, and making efforts to lower the demand on the energy infrastructure.
The portfolio is comprised of 58 companies. Between September 30, 2016, and May, 2019, the portfolio has produced a return of 39.71%, compared to 39.83% for the S&P 500.
This portfolio invests in biotechnology, medical research companies, and medical device manufacturers, with the goal of dealing with the biggest diseases. These include cancer, tuberculosis and malaria.
The portfolio consists of 56 companies. Between September 30, 2016 and May, 2019, the portfolio has returned 24.01%, compared to 39.83% for the S&P 500.
A portfolio that recognizes the limitations on clean water supplies, and focuses on companies that work to conserve water, clean it, and improve delivery systems. That includes water filters, waterpipe repairs, and water treatment facilities.
The portfolio is comprised of 49 companies. Between September 30, 2016, and May, 2019, the portfolio returned 40.99%, compared with 39.83% for the S&P 500.
This portfolio invests in recycling plants, repurposing companies, and waste treatment facilities, with the goal of minimizing both the amount and the effect of waste on the environment.
The portfolio currently holds 36 companies. Between September 30, 2016, and May, 2019, the portfolio returned 27.90%, compared with 39.83% for the S&P 500.
Invests in fitness companies, organic food distributors, and innovating home care providers. Overall, the companies are focus on food, fitness, and new technologies to create longer and healthier lives.
The portfolio consists of 53 companies. Between September 30, 2016, and May, 2019, the portfolio returned 34.93%, compared with 39.83% for the S&P 500.
Swell Impact 400
This is Swell Investing’s catch-all portfolio. It invests in a larger number of companies that address one or more of the focus areas of the other six portfolios. The number 400 in the name indicates the approximate number of companies held in the portfolio. The portfolio invests in 10 different industry sectors, favoring companies with high scores for socially responsible investing.
If you’re not sure which of the six other portfolios to invest in, you can simply invest in the Swell Impact portfolio. Unfortunately, the portfolio hasn’t been around very long. It’s had a return of 3.66% since it began on July 30, 2018. That compares with 4.06% for the S&P 500 over the same space of time.
Swell Investing Fees
Swell Investing charges a single annual advisory fee of 0.75% of your account balance.
That means you will pay $75 for the management of a $10,000 portfolio, or $750 for $100,000. Unlike many other robo-advisors, they don’t offer tiered pricing, with lower fees for higher balances. They also don’t charge any other fees, particularly trading fees. This is important, because their portfolios are comprised entirely of individual stocks, and not mutual funds or exchange traded funds.
The basic advisory fee is considerably higher than the typical robo-advisor advisory fee range of 0.25% to 0.50%. However, Swell Investing provides a very specific type of investing, that also works entirely with individual stocks.
Current promotions: None at the present time.
How to Sign Up with Swell Investing
Swell Investing requires that you be at least 18 years old and a US citizen to participate in the platform.
First, just go to the site through our link here:
Next, you’ll need to provide your full name, physical address, Social Security number, date of birth, citizenship or residency status, and employment status.
You may also be asked questions about current investments, risk tolerance and investment time horizon to determine if the platform is the right choice for you. However, no credit related information will be pulled during the application process.
After you set up your account, you’ll be asked to create a portfolio mix. This is when you will determine how much you want to allocate to any or each of the seven Swell Investing portfolios. You can choose either a flat dollar amount or a percentage for each. You can change those percentages at any time after your account has been opened.
Once all information has been provided, it will take between four and eight business days for your account to be activated and fully invested.
You can fund your account by linking to your bank account. Swell Investing has automatic linking with more than 1,500 banks and credit unions. But even if your institution is not on the list, you can still link the account after it has been confirmed by two random micro-deposits.
Once the bank account has been linked with your Swell Investing account, you’ll be able to move money back-and-forth between the two accounts. You can even set up a recurring deposits into your investment account.
Swell Investing Pros and Cons
- Invest with as little as $50.
- Swell Investing is a dedicated SRI robo-advisor, not a robo-advisor that simply offers an SRI portfolio option.
- Choose from one of seven different portfolios.
- Choose your own portfolio allocations, and change them later if you want.
- The company has the backing of a major insurance company, which is very different from many robo-advisors that are being funded by venture capital.
- High advisory fee. At 0.75% per year, it’s higher than the common robo-advisor advisory fee range of between 0.25% and 0.50%.
- Joint investment accounts are not available.
- No fixed income investment option, like bonds, are offered.
- Mobile app for iOS only. (iOS app just released 5/15/19)
- Customer service is available by email only.
Should You Sign Up for Swell Investing?
Swell Investing is an excellent choice if you want to engage in SRI investing. The platform is dedicated solely to that very specialized form of investing. It offers you a number of portfolio options, from which you can choose the ones you believe in the most. And you only need $50 to get started.
The annual advisory fee is higher than it is for other robo-advisors. But SRI investing – at least to the degree that it’s done by Swell Investing – is highly specialized. It may be worth paying a little more on the annual fee to invest in what you believe in.
Just be aware that this is not an all-in-one investment platform. It’s highly specialized, and doesn’t offer full-service investing. For example, if you want a fixed income allocation, like bonds, you’ll have to either work with another robo-advisor, or invest in ETFs dedicated specifically to fixed income investments.
If you’d like more information, or you’d like to invest with the service, visit the Swell Investing website through our link below.
|Robo-Advisor||Assets Under Management (AUM)||Annual Fee||Account Minimum||Bonuses||Review|
|Betterment||$15 billion||0.25% of account balance. 0.40-0.50% w/ human advisors||None||Up to one year managed FREE||Review|
|Wealthfront||$12 billion||0.25% of account balance||$500||$5k managed FREE (Bible Money Matters readers)||Review|
|M1 Finance||$1 billion||FREE (fees for add-on services)||None||Review|
|Blooom||$3 billion||$10/month any account size||None||FREE 401(k) Checkup||Review|
|Axos Invest||$153 million||FREE (fees for add-on services)||None||Review|
|Acorns||$1 billion||$1/month under $5k. 0.25% of account balance above $5k. Free for college students.||None||Review|
|Stash Invest||$600 million||$1/month under $5k. 0.25% of account balance above $5k.||$5||$5 New Account Bonus (Bible Money Matters readers)||Review|
|SigFig||$120 million||Under $10k FREE; 0.25% of account balance above $10k||$2,000|
|Personal Capital||$8.5 billion||0.49% to 0.89% of account balance||$25,000||Review|
|Wealthsimple||$5 billion||$0-$99,999 0.50%/yr; $100k+ 0.40%/yr||None||Up to $10k managed free (Bible Money Matters readers)||Review|
|Charles Schwab||$15.9 billion||FREE (They require you to hold 6-30% of portfolio in cash)||$5,000|
|Fidelity Go||N/A||0.35% of account balance;||$5,000|
|Vanguard||$101 billion||0.30% of account balance||$50,000|