How ETFs can help you support conscious or sustainability causes

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If you’re looking for a way to direct your investments toward sustainable companies or support socially conscious causes or entities, consider purchasing ETFs to broaden your portfolio.

"ETFs are a diversified basket or typically stocks or bonds that can be paired to build a portfolio," said Todd Rosenbluth, head of research at VettiFi. "Some are broadly based and others are more narrowly focused to areas such as smaller companies, dividend payers or technology. They can be purchased or sold intraday as needed and tend to have low management fees."

For example, Rosenbluth said investors seeking to put their money to work in a socially conscious or sustainable manner can turn to ETFs such as iShares ESG Aware MSCI USA ETF or SPDR S&P 500 ESG ETF.

TickerSecurityLastChangeChange %
ESGUISHARES TRUST ESG AWARE MSCI USA ETF91.92-0.65-0.70%
EFIVSPDR SERIES TRUST SPDR S&P 500 ESG ETF39.56-0.20-0.50%

"These ETFs provide diversified exposure to large-cap companies that have relatively strong environmental policies and/or societal practices compared to peers," he continued.

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ETFs like these have low expense ratios and investors benefit by knowing what is inside the portfolio to ensure it aligns with their beliefs, he says.

"There are also more targeted approaches focused on climate change and gender equality," Rosenbluth said.

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David Auerbach, managing director of Armada ETF Advisors, explained that there are ETFs that track what is going on in the world and make socially conscious investments that are aligned with the interests of its shareholders.

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What about a fund that “gives back?”

There are ETFs that make charitable donations to causes that support the underlying mission of the ETF, said Auerbach.

"The beauty of the ETF is that it is transparent and trades like a stock," he said. Thus, you can invest in a "fund" and track it on a minute-by-minute basis when the stock market is open, he added.

"Understand that the ‘price’ is based on the underlying companies (or constituents) that make up the ETF," Auerbach continued.

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ESG Investing

VettiFi explains ESG Investing "is the consideration of environmental, social and governance factors alongside financial factors in the investment decision–making process."

VettiFi has provided a guide to help investors match a cause they can support through purchasing an ETF.

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