Forget globalization. Here's how to profit from 'localization.'
How ethical investors can get involved in this trend.
from the August 6, 2007 edition
Page 1 of 2
Many things aren't made in the US anymore, as any Wal-Mart shopper knows. But slowly, some consumers are rebelling against this globalization. Some look to buy foods produced within 150 miles of their homes. Others avoid big-box stores to patronize local retailers. Some investors are also eyeing ways to get involved in the go-local movement. Is it time for you to jump in? The Monitor's Laurent Belsie recently talked with two experts: John Katovich, chief legal officer of the Boston Stock Exchange, and Elyse Cherry, president of the Boston Community Venture Fund. Here's an edited transcript of their comments:
Elyse, why do so many people feel its ethical to go local?
Ms. Cherry: Many people who participate in the world today recognize that while globalization is with us and, in fact, may have many, many benefits, the benefits and burdens of globalization are not equally shared. And I think that there is a concern to be certain that local communities are not inappropriately burdened with the effects of globalization. And so, often in an attempt to create vibrant, diverse local communities, people attempt to invest locally.
Is this a movement that ethical investors should pay attention to?
Mr. Katovich: I think it is. There are a number of people that have been thinking quite a bit about how to get investors to invest locally. But it's really the investors that have to look at themselves and think about what it is that they want and expect – and whether they might be satisfied investing locally, even if it meant possibly having slightly less return.
If they accept lower returns, where would they invest?
Cherry: For an average investor, one great way to invest is to seek out your local community loan fund. That's a debt instrument rather than an equity instrument and it does tend to have a somewhat lower rate of return – although, frankly, these days not really less than a CD. And it's a great way to go out and invest in housing or charter schools or child-care facilities or inner-city real estate. And the risk on those investments is extremely low. We've done probably a quarter billion dollars of investing and our losses are less than a 20th of 1 percent.
Where can you find out about the loan funds?
Cherry: There's a national association called Opportunity Finance Network and you can find a loan fund in virtually any state – and often several in a state.
Suppose I want to invest in, say, a local hardware store.
Katovich: There was a day when you could do that. [But] the day came when federal laws changed that scenario and required you to become an accredited investor in order for you to invest in a private company.
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