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Best ESG Mutual Funds and ETFs

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Best ESG Mutual Funds and ETFs

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Some investors seek returns beyond monetary rewards. Their criteria include investing in companies concerned with positively impacting the environment, offering fair compensation to employees and a board of directors looking out for the interests of customers.

Investors concerned about environmental, social and governance (ESG) investing diversify their portfolios by investing in an ESG mutual fund or exchange-traded fund (ETF) while ensuring the company they invested in cares about its stakeholders and the environment.

Although numerous companies meet stringent ESG standards, only some provide significant returns while offering low costs. Benzinga explores the five best ESG mutual funds and ETFs. 

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The Best ESG Mutual Funds and ETFs

The first thing that ESG investors look for in companies is their level of commitment toward the environment, social justice and governance. Although ESG issues are important to such investors, so are profits. ESG mutual funds and ETFs need to have a history of providing good returns.

High costs for managing funds decrease profits and can result in investors losing money if returns are low. Benzinga picked mutual funds and ETFs that consist of ESG companies with a strong record of profits and low costs.

The Vanguard FTSE Social Index Fund Admiral Shares is a mutual fund that consists of companies with mid- and large-cap market capitalizations. The fund tracks the performance of the FTSE4Good US Select Index and excludes stocks of companies in the alcohol, tobacco and weapons industries. It also excludes companies that violate human and labor rights.

One of the reasons investors find the VFTAX attractive is the low expense ratio of 0.14%. That ratio is one of the lowest in the market because the fund is managed passively. Investors need to contribute at least $3,000 to the fund, which has a 19% three-year trailing return.

The majority of the fund consists of technology companies, and a significant portion is consumer discretionary and healthcare companies. An institutional version of the fund requires a minimum investment of $5 million and offers a 0.12% expense ratio.

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iShares Global Clean Energy ETF (NASDAQ: ICLN) is a BlackRock-managed ETF that tracks the S&P Global Clean Energy Index. The fund was launched in 2008 and consists of clean-energy companies mostly in the utilities, technology and industrial sectors.

ICLN has a 0.42% expense ratio and a 10% 10-year trailing return. Its 5-year return is even more impressive — 21%. The fund’s five-year performance beat the S&P 500, but its 10-year performance was worse than the benchmark index. It offers semi-annual distributions.

The fund provided a 141% annual return in 2020, but you should also note that it has a standard deviation of more than 30%, making it highly volatile. 

Parnassus Core Equity Fund Mutual Fund

Parnassus Core Equity Fund is a mutual fund that consists of large-cap companies and has more than $27 billion in assets. The fund has a net expense ratio of 0.82% because it’s actively managed, and it requires a minimum investment of $2,000.

PRBLX consists of companies in the information technology, industrial and communication service sectors while avoiding companies that generate most of their revenue from alcohol, weapons and nuclear power. 

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The fund’s annual average return for three consecutive years was slightly over 20%. It has a 10-year trailing return of over 14%. The main reasons for the fund’s solid performance are the downside protection while participating in market rallies of an 89% upside capture.

iShares MSCI USA ESG Select ETF (NYSEARCA: SUSA) consists of mid- and large-cap U.S. stocks and avoids low-rating ESG companies. It tracks the MSCI USA Extended ESG Select Index. The fund’s biggest investments are in information technology companies such as Microsoft Corp. (NASDAQ: MSFT) and Apple Inc. (NASDAQ: AAPL).

The fund’s expense ratio is 0.25%, and it has provided a 5-year trailing return of just above 15%. Its 10-year trailing return is slightly higher than 13%. The fund provides quarterly distributions and has more than $3.4 billion in net assets.

Shelton Green Alpha Fund Mutual Fund

The Shelton Green Alpha Fund (NEXTX) is a mutual fund that invests in companies providing products and services that reduce environmental risks and improve human well-being and increase economic efficiencies.

This mutual fund is suitable for investors who can stomach high volatility and high management costs — 1.16%. In exchange for a high expense ratio, investors received significant returns. The fund provided an average return of 31% in three years, and it’s got a 22% five-year trailing return.

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The Shelton Green Alpha Fund was established in March 2013 and has a minimum investment of $1,000.

What is an ESG Mutual Fund or ETF?

ESG mutual funds and ETFs consist of stocks and bonds that consider environmental, social and governance issues. Investors targeting such funds are engaged in socially responsible investing (SRI).

Managers of ESG mutual funds and ETFs invest in companies that surpass stringent ESG standards. They’re companies with a high sustainability score, and fund managers avoid companies practicing poor labor relations and have low standards for pollution and stakeholder engagement.

Although investors of these funds seek investments in companies valuing social and environmental causes, the companies also have to provide significant returns. Several ESG mutual funds and ETFs have outperformed the S&P 500, and some offer a low expense ratio.

How do Mutual Funds and ETFs Work?

A mutual fund or ETF is a pool of money gathered from investors. Fund managers use the money collected to buy stocks, bonds and other securities aligned with the fund’s goal. Investing in funds can be passive or active.

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Passive investing is done through index funds and ETFs. The cost associated with these funds is usually low because the manager’s engagement with the fund is minimal. Fund managers are active when they regularly buy and sell securities to outperform the market.

Actively managed funds cost more than passive funds. But investors can make bigger profits because passive investing aims to match the returns of a market index fund such as the S&P 500. Since a mutual fund or ETF consists of numerous companies, it intrinsically diversifies your portfolio.

You can invest in a fund that offers equities, bonds or a mixture of both. For example, some funds consist of companies with only large market capitalizations or international corporations.

What to Look for in ESG Mutual Funds and ETFs

Investors wanting to grow their money in ESG mutual funds and ETFs need to consider several factors to ensure that the equities and bonds they invested in match their values and goals.

Environment: A key aspect that ESG investors look for in a company is its management of environmental impact. They want to know if a company’s products and services adversely affect the environment with air or water pollution.

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ESG investing involves concern about a company’s sustainability efforts in the supply chain and its strategies to reduce its carbon footprint. They’re interested in investing in companies free of fossil fuels and ones that use renewable energy sources.

Social: The social aspect that investors seek in ESG funds includes a company’s treatment of people and commitment to labor rights. They want to know that the company fairly compensates its employees and provides equal employment opportunities.

ESG investors care about companies that support local communities and sponsor healthcare, education and housing.

Governance: A company that meets stringent ESG standards has policies that benefit the company’s stakeholders. ESG investors are interested in companies that ensure balanced remuneration between the executives and employees. It’s important to them that a company abides by ethical business practices.

Returns: ESG funds track a market index fund, using it as a benchmark. You should invest in a fund that outperforms the tracked fund. But at the very least, it should match the returns of the tracked index fund.

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Costs: Since most ESG mutual funds are passively managed, their costs are low. Some funds have a high expense ratio, so they should have a history of outperforming the market to be profitable investments.

Compare Online Brokers

Comparing the fees and reliability of online brokers offering ESG investing is challenging. Benzinga has made the selection of the best online brokers easy. 

Frequently Asked Questions

What is ESG in a mutual fund or ETF?

ESG is an acronym for environment, social and governance in mutual fund investing and ETF investing. ESG investors buy stocks and bonds in mutual funds or ETFs that meet stringent standards of responsible environmental, social and governance operations.  

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Are ESG funds a good investment?

The return of an ESG mutual fund or ETF depends on how it performs and the costs associated. Some ESG mutual funds and ETFs have consistently outperformed the market and offer a low expense ratio.

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Analysis

Bitcoin, Ethereum Technical Analysis: BTC Edges Closer To $18,800 Support Level On Saturday

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Bitcoin, Ethereum Technical Analysis: BTC Edges Closer To $18,800 Support Level On Saturday

Bitcoin moved closer to its long-term support level of $18,800 to start the weekend, as prices of cryptocurrencies were once again lower. While bitcoin has now fallen for seven straight sessions, ethereum also saw similar declines, and as of writing is down 2.40% from yesterday’s high.

Bitcoin

The world’s largest cryptocurrency by market capitalization bitcoin (BTC) was once again in the red on Saturday, as prices edged closer to a key support level.

Following a high of $19,590.12 on Friday, BTC/USD rallied to an intraday low of $19,027.08 to start the weekend.

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This move sees bitcoin hover slightly above its recent support point at $18,800, which was hit earlier in the week.

BTC/USD Daily Chart

Despite three recent moves below this level, breakouts have been mainly false, however bears could be set to attempt a more sustained drop in upcoming days.

Should we see a move below this point, the $17,500 mark will likely be the price target for those shorting the token.

In order to get there, relative strength would need to move below its own floor, with the 27.5 level on the RSI indicator acting as point of support.

Ethereum

Ethereum (ETH) bear’s were also pressuring prices to start the weekend, as the token continued to hover slightly above the $1,000 level.

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As of writing this, ETH/USD has now fallen to a low of $1,033.96 on Saturday, which is marginally below its $1,050 floor.

Should bearish pressure persist this weekend, then the next target would inevitably be below $1,000.

ETH/USD Daily Chart

In particular, bears will be looking at the $885 support point as a preferred exit point, however, the 14-day RSI would need to break below its current floor of 29.5.

Since the beginning of April, ETH has lost over two-thirds of its value, however, the declines might not have ended yet.

Do you expect any more significant drops in bitcoin’s and ethereum’s price this month? Leave your thoughts in the comments below.

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Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Sleeping Bitcoins Wake Up, Kiyosaki Waits For $1,100 BTC, And Zuckerberg Eyes Metaverse Money — Bitcoin.com News Week In Review

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Sleeping Bitcoins Wake Up, Kiyosaki Waits For $1,100 BTC, And Zuckerberg Eyes Metaverse Money — Bitcoin.com News Week In Review

As July begins and markets remain bearish, there’s still no shortage of dynamic developments in the crypto space. In this week’s Bitcoin.com News Week in Review, ‘sleeping bitcoins’ from 2010 make moves, Rich Dad Poor Dad author Robert Kiyosaki says he is waiting for bitcoin to test $1,100, Russia denies debt default allegations, and Mark Zuckerberg discusses the opportunities of the metaverse.

String of 200 ‘Sleeping Bitcoins’ From 2010 Worth $4.27 Million Awakens

A large number of so-called ‘sleeping bitcoins’ have awoken from slumber as four block rewards were spent at block height 742,183. The old coins spent last week were block rewards mined on September 15, 16, 26, and October 29, 2010. During that time frame, bitcoin miners received 50 BTC for every block found in contrast to the 6.25 BTC per block reward miners get today.

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Rich Dad Poor Dad’s Robert Kiyosaki Says He’s Waiting for Bitcoin to Test $1,100 to Buy More

The famous author of the best-selling book Rich Dad Poor Dad, Robert Kiyosaki, says he’s waiting for the price of bitcoin to test $1,100. He added that he will buy more if the cryptocurrency recovers from that price level.

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Reports Claim Russia Defaulted on Foreign Debt for the First Time in a Century, Kremlin Disagrees and Says It Paid

According to reports, the Russian Federation has defaulted on its foreign debt for the first time since 1918. Bondholders told the press that they had not received payments from the transcontinental country. However, Russia’s finance ministry denies the allegations and says the country made the payments via the Euroclear monetary system.

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Mark Zuckerberg Expects Billions of People to Use the Metaverse Generating Massive Revenue for Meta

Mark Zuckerberg, CEO of Meta, formerly Facebook, has shared how the metaverse will be a key part of his business and bring hundreds of billions of dollars in revenue. “Our playbook over time has been build services, try to serve as many people as possible,” said Zuckerberg.

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What are your thoughts on this week’s developments in finance and crypto? Be sure to let us know in the comments section below.

Bitcoin.com

Bitcoin.com is your premier source for everything Bitcoin-related. We can help you buy bitcoins and choose a bitcoin wallet. You can also read the latest news, or engage with the community on our Bitcoin Forum. Please keep in mind that this is a commercial website that lists wallets, exchanges and other Bitcoin-related companies.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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No Withdrawals Have Been Halted, Claims KuCoin Turning Down All Rumors

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KuCoin, a cryptocurrency marketplace, has absolutely denied allegations that they were limiting transactions on their network due to massive losses sustained as a result of the LUNA crash.

Johnny Lyu, the CEO of KuCoin, addressed the issue in the early hours today. Among his latest tweets, he states that be careful of Fear, Uncertainty and Doubt! I’m not certain who is circulating such stories or what motives they possess. However, KuCoin has no connection to LUNA, 3AC, Babel, etc.

The Tweet also claims that there is no “huge suffering” by any “currency crisis.” No intention to block withdrawal, and everything on KuCoin is running smoothly.

Lyu went on to suggest that the exchange platform completed its $150 million financing in May 2022, boosting the firm’s worth to $10 billion. He further stated that, despite the fact that several cryptocurrency exchanges recently declared losses, KuCoin keeps growing with additional recruitment even during the current tough market situations.

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Lyu also warned legal proceedings towards individuals spreading misinformation and defaming the transaction. “Being open is definitely one of our core beliefs,” he added.

The update also said that the company will shortly release their 2022 H1 review report. This will provide further information about the company’s activities. KuCoin retains the authority to conduct legal action against FUDers who knowingly publish unconfirmed information.

More Crypto Exchanges To Go Insolvent

Notably, the current chaos in the crypto industry, along with the large declines, have unmasked certain market participants. These market participants are the ones who have been using extreme leverage and are now experiencing a liquidity shortage. Perhaps several of the largest crypto financiers, such as BlockFi, are also struggling.

According to Sam Bankman-Fried, CEO of crypto exchange FTX, there are numerous similar exchanges in deeper trouble that may declare insolvency quite shortly. In these kinds of cases, traders should exercise extreme caution and verify that the cryptocurrency trading network operators with which they are connected offer sufficient accountability and coordination.

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