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The creation of a portfolio with sustainable investments can be both time consuming and complicated, and the management of those portfolios often carry fees of approximately 1%.
Sustainable investments take into account financial returns along with social, environmental, and political concerns, which makes them rather complex. But robo-advisors can make sustainable investing simpler by using algorithms to automatically invest in assets based on a user's preferences. And these automated services are typically less expensive than their human counterparts at 0.3% to 0.5% fees.
Therefore, robo-advisors have a tremendous opportunity when it comes to sustainable investments, which make up 28% of all global Assets Under Management (AUM). Worldwide sustainable investments climbed to $21.4 trillion in 2014, according to the Global Sustainable Investment Association (GSIA). Total global AUM hit $74 trillion in that same year.
BI Intelligence, Business Insider's premium research service, expects robo-advisors to manage $8 trillion globally by 2020. If 28% of this were sustainable investments, then this would equal a market of $2 trillion.
Importantly, many key demographics are interested in sustainable investments, as 75% of millennials consider social, environmental, and/or political factors when they invest, compared to just 46% of baby boomers, according to GSIA. Furthermore, 76% of women consider ethical factors important for investing, compared to 60% for men.
Robo-advisors have already begun offering specific sustainable investment products. In October 2015, Earthfolio debuted the first startup robo-advisor that exclusively makes sustainable investments. Motif, a robo-advisor startup that lets users invest in trends, provides four different choices for such investing, such as green...
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