It was while Brian Salerno was eating lunch at Mike Ditka’s Restaurant in Chicago with his wife, Maureen, five years ago that he experienced an investment epiphany of sorts. It’s the kind of insight that might be considered akin to a bunch of tree-hugging granola-heads pledging allegiance a few years back to a bygone counterculture revolution.
“We talked about what the new next thing (in investing) might be for the next couple of decades,” said Salerno, vice president and senior portfolio manager for Huntington National Bank in downtown Grand Rapids. “We concluded it was green.”
The couple’s perception was reached anecdotally at first, but grew to become an influential factor in Huntington’s investment products. They noted their proclivity for riding bicycles instead of hopping in the family vehicle, and that the size of their recycling bin was larger than their trash container. From there, they considered just how much their lives had changed based on their environmentally friendly attitudes. Salerno concluded such lifestyle changes also were the rudder that could steer shareholders to investing in ecologically focused companies.
Salerno said he hashed over the idea of launching an actively managed exchange-traded fund that invests exclusively in environmentally responsible stocks with Huntington’s chief investment officer, who was initially cool to the idea.
Salerno was told “no” several times, but he was so convinced this was an investment fund whose time had come that he kept bringing the idea to the table.
To some extent, there’s still the perception that corporate environmental practices are too speculative to invest in. Salerno was convinced otherwise.
“I’m a persistent, stubborn person, especially when I have a right idea,” said Salerno.
In June, his tenacity paid off, when the ETF Huntington EcoLogical Strategy officially was launched. With the ticker symbol HECO, Salerno said the “L” in EcoLogical is capitalized to get across the idea that Huntington has a logical approach to investing in environmentally responsible stocks.
Salerno said HECO is the world’s first actively managed ETF that invests exclusively in environmentally responsible stocks. Information can be reviewed at www.huntingtonstrategyshares.com
It’s an investment effort Salerno has been incubating for four years through separately managed accounts, including his own individual retirement account. He enlisted the help of out-of-state interns, as well as five from Grand Valley State University, who were charged with researching regulations, potential stocks and marketing plans.
“I went down to every sector of the economy and noted it was impacted by this (sustainability),” said Salerno, “from fuel efficiency to organic food, zero to waste, cradle-to-cradle packaging to biodegradable materials, zero chemicals. Not all are economically viable, but all are green.”
Salerno said HECO has culled approximately 50 primarily domestic companies, which include eBay, Whole Foods Market and Johnson & Johnson.
Not every ecological business makes it on HECO’s short list, said Salerno.
“If you go with the greenest companies, you may not have the high likelihood of succeeding since some companies are not ready for prime time and are not good investments,” said Salerno. “They have a sense of well-being that’s concurrent with the way we want to live, yet we’re not risking the financial well-being by investing in speculative (companies).”
On one obvious level, Europe leads the way in green investments, but those investments now are catching the eye of U.S. shareholders, as well, because they fit their “style of investing,” said Salerno.
“It’s something that’s far more conventional in Europe, but I believe pensions and foundations are increasingly looking to this style of investing,” he said. “We’re finding companies that have a good, profitable model but don’t sacrifice the well-being of the environment.”