Paul Tudor Jones is one of the most successful and wealthiest hedge fund managers of all time.
He’s also a philanthropist and the driving force behind JUST Capital, a not-for-profit charity organization that, according to its mission statement, “helps people, companies, and markets do the right thing by tracking business behaviors Americans care about most.”
What exactly does all that mean?
Well, I had the pleasure of hearing Paul Tudor Jones speak at the Inside ETFs conference last year, where he shared the JUST Capital story and value proposition.
It goes like this…
First, we shouldn’t assume we know the desires and preferences of investors and, more broadly, the American people.
So, JUST Capital has conducted extensive surveys of the American people — over 80,000 responses in total — to determine which issues are most important to us, and to what degree.
It turns out the environment is indeed an important issue to the American people, but it ranks behind fair treatment of both workers and customers.
Job creation is another important issue, according to survey results, as is a company’s involvement with and impact on the local community.
All told, JUST Capital seems to have homed in on the issues that are most important to Americans. And they suggest these are the issues people consider most influential in our decision-making, whether we’re deciding which company to invest in, work for or buy a product or service from.
You can read more about the specific issues here.
Why Is Identifying These Issues So Important?
If these are the issues driving the decisions of America’s investors, workers, and consumers, then these are the issues that the “good actors” in Corporate America will be rewarded for!
I particularly like how this approach is opposite that of the negative-screening approach used by most funds in the “ESG” (Environmental, Social, and Governance) category.
Instead of suggesting an investor not invest in Philip Morris because they make cigarettes, JUST Capital works to highlight companies you should invest in — because of that company’s commitment to being a “good actor” and appropriately addressing the issues most important to America’s investors, workers and consumers.
The idea is that these “good” companies will actually outperform “bad” companies, simply because they operate in line with what Americans value.
I don’t know about you, but that makes a lot of sense to me!
If that resonates with you, this approach to “good,” or “just,” investing is available in a one-click ETF solution — the Goldman Sachs JUST U.S. Large-Cap ETF (NYSE: JUST).
The construction of this ETF is pretty straight-forward. JUST Capital ranks each of the 1,000 companies in the large-cap Russell 1000 index based on how well they score on the issues deemed most important to Americans. And then they buy the 500 top-ranked stocks, while leaving the 500 bottom-ranked stocks alone.
Again, the idea here is that the 500 top-ranked stocks will outperform the 500 bottom-ranked stocks, since the top-ranked companies are operating in a way that’s in line with Americans’ preference for “good.”
Along with the potential for outperforming the market, investors in the JUST ETF can feel good about supporting companies that are above-average on the “doing good” axis.
For example, highly-ranked JUST companies:
- Produce 45% lower greenhouse gas emissions per dollar or revenue
- Give 2.3-times more to charity
- Pay 94% less in Equal Employment Opportunity Commission fines
- Pay 71% less in fines for consumer sales-terms violations
That’s great. But the advantages to highly-ranked JUST companies aren’t limited to fluffy “feel-good” things. There’s also evidence that JUST companies perform better than their peers on traditional measures, as JUST companies:
- Create U.S. jobs at a 20% greater rate
- Employ twice as many workers in the U.S.
- Are twice as likely to pay nearly every worker a living wage
- Have a 7% higher return on equity (ROE)
All told, the Goldman Sachs JUST U.S. Large-Cap ETF (NYSE: JUST) is a low-cost, diversified U.S. Large-Cap fund with a tilt toward companies that are “doing good,” as measured by the issues actual Americans have said are important to them, which therefore drive their decisions about which companies to work for, which companies to buy from, and which companies to invest in.
I think it’s a great proposition!
So if you’re the type of person who buys a few shares of the SPDR S&P 500 ETF (NYSE: SPY) every month, aiming to build a passive “buy-and-hold” retirement nest egg… I hope you’ll at least consider the Goldman Sachs JUST U.S. Large-Cap ETF (NYSE: JUST) as a worthy alternative.
You may just find yourself outperforming the market, and supporting “good” companies!
(I originally recommended the JUST Capital ETF to my Green Zone Stocks readers last April. The fund is up 12% since, one percentage point better than its Russell 1000 benchmark.)
To good profits.