Ethical investing with algorithms

Todd Gormley, Associate Professor of Finance, comments on OpenInvest, a new fintech venture that focuses on “ethical investing,” and uses algorithms to determine which firms to invest in.

The key idea is you’re just trying to get the return of a wide set of firms without trying to pick which ones you think are going to perform better. Passive funds, like the portfolios built by OpenInvest algorithms, are the “new normal” because they’re less expensive for investors, and there’s no real evidence that actively managed funds actually do any better.

—Professor Todd Gormley

Link to article “This Man’s Algorithms will Manage Your Money — With a Conscience” published Jan 19, 2017 on Ozy.

Professor Gormley’s most recent research has analyzed the impact of passive institutional investors on both firms’ governance structures and the strategic choices of outside activists.

Link to his faculty page.