IHNOW Strategy
The premise of these funds is that investing locally can augment financial yields and provide other, not easily quantified benefits, to the locally based investor, through leveraging of the investor’s other economic activities and interests. The local or regional managers of the IHNOW Funds, can leverage their knowledge and skill by making investment decisions that implicitly incorporate their thorough knowledge of the community (schools, businesses, social connections) to produce results superior to those of equal talent and ability but who lack the day to day, on the street knowledge of the community.
Accordingly, IHNOW invests in companies with substantial ties to the regional economy and holds indentures of locally and regionally based government entities. This way the investor/resident leverages his or her economic power as a consumer, ratepayer and taxpayer.
The purchase of necessities is not discretionary but where to purchase these necessities often is. When the investor/consumer decides to direct his or her purchase to a company held by an IHNOW fund, that purchase directly increases the company’s revenue. The benefit inures to the investor/consumer as potential increment in the company’s share value or dividend-issuing capacity.
Also, part of the purchase dollar is allotted to employee salaries which, when spent, have a positive multiplier effect in the investor’s community benefiting small, privately owned businesses as well.
The average investor/ratepayer pays a considerable portion of disposable income on utility bills – gas, electric, water and sewer, telecommunications. The effect of these rates affects the investor/ratepayer more as a ratepayer than as shareholder. But as a shareholder the investor/ratepayer can act as a watchdog to see that the utility reigns in costs. And, if the utility’s increased rates increase the utility’s profitability, the investor/ratepayer’s shareholder interest acts a hedge against such rate increases.
Finally, as a shareholder/owner, the investor, through the fund, can influence decisions which may have a direct effect on the investor as a resident of the community. This can be done by proposing or voting on resolutions, choosing the company’s board of directors and the like. For instance, the shareholder can advocate for keeping jobs in the region and for companies committing to the environmental health of the region.
The first venture of IHNOW has been directed to benefiting the greater Philadelphia Region - Southeastern Pennsylvania, New Jersey and Delaware and began on July 1, 2006. The portfolio is subsantially but not exclusively based on the Philadelphia Inquirer Bloomberg Philadelphia Index. Click here for portfolio tracking of the IHNOW Delaware Valley Fund.