Exchange Traded Funds, or ETFs, are a popular option for investors looking to grow their money with both short and long-term time horizons. ETFs allow you to buy and sell funds like a stock on a popular stock exchange. The combination of instant diversification and quick liquidity is a good reason to consider them as a first investment or part of a veteran portfolio.
Many ETFs track major indices like the S&P 500 or the Dow Jones Industrial Average, but ETFs can focus on virtually anything. Some focus on ethical, environmental or social ‘themes’ which at Goodments we define and ethical or responsible funds. This means they must have a specific sustainable mission, a responsible methodology to portfolio construction (e.g. screening) or by thematic investment approach be working towards providing environmental, social or ethical benefit.
A big part of what we do at Goodments is review and rate companies and funds so that everyday people can find and make investments that fit their Planet, People and Ethical values.
Using our research, here are our top 10 Ethical ETFs.
Top of the pops:
The Watering the World Fund
Goodments Score 81
Invesco S&P Global Water Index ETF (CGW.US) (+5.1% YTD)
With water scarcity becoming an increasingly global issue, this fund gives access to 50 companies from around the world that are involved in water-related businesses.
Clean Tech Fund
Goodments Score 77
Invesco Cleantech ETF (PZD.US) (-1.2% YTD)
Investing in future-focused businesses that don’t impact our environment is a key driver for ethical investors. This fund is made up of companies whose tech and services reduce negative environmental impacts through significant energy efficiency improvements, the sustainable use of resources, or environmental protection activities.
Sun Powered Fund
Goodments Score 74
Invesco Solar ETF (TAN.US) (+37% YTD)
Using our sun to power our earth. This is a global fund focussing on solar energy providers, innovations and technologies.
Accessible Water Fund
Goodments Score 74
Tortoise Global Water ESG Fund (TBLU.US) (+4.7 YTD)
This fund looks to make water accessible for all through infrastructure and the innovation of water supply, distribution, recycling and use.
Best of the rest:
Green Bonds Fund
Goodments Score 85
VanEck Vectors Green Bond ETF (GRNB.US) (+5.5 YTD)
A fund made up of Green Bonds, otherwise known as Climate Bonds, which used to finance sustainability and climate-related projects.
Wind Powered Fund
Goodments Score 79
First Trust Global Wind Energy ETF (FAN.US) (+2.3 YTD)
Using the wind to power the world. A fund focussing on wind energy tech and innovation to create a more sustainable planet.
Bossing Diversity Fund
Goodments Score 76
SPDR SSGA Gender Diversity Index ETF (SHE.US) (-5.1 YTD)
This fund is made up of companies with strong gender diversity at the leadership level. Making it better for all by starting at the top. The fund’s charity, SHE Impacts, also provides grants to organizations that prepare and encourage girls to take their place in industries where women have low representation today.
Cleaning the world Fund
Goodments Score 76
VanEck Vectors Environmental Services ETF (EVX.US) (+13.2 YTD)
We make a mess, they clean it up. A fund focussing on important world-saving environmental services – removal, recycling and recovery hazardous and solid waste.
UN’s Sustainability Goals Fund
Goodments Score 76
iShares MSCI Global Impact ETF (SDG.US) (-3.5 YTD)
A fund made up of companies that seek to address some of the world’s major social and environmental challenges and advance the UN’s 17 Sustainable Development Goals focussing on Poverty, Equality, Energy, Conservation and Sustainability.
Society Matters Fund
Goodments Score 72
iShares MSCI KLD 400 Social ETF (DSI.US) (-1.7 YTD)
A fund that actively not backing companies which impact the people and our society through their activities and production. Excluding big harmful issues like Tobacco, Military, Firearms and Adult Entertainment.
Goodments provides sustainability rating to over 7,000 global investments, 2,300 of which are currently available to trade through US stock exchanged with Goodments.
Working from a framework of covering Planet (Environmental), People (Social) and Ethics (Ethical) issues, Goodments empowers investors to build a portfolio of companies based on their sustainable preferences and exclusions.
Responsible funds scores are awarded based on the scores of the underlying companies that the funds invest in. To be available on Goodments, ethical funds must have a specific sustainable mission, a methodology to portfolio construction (e.g. screening) or by thematic investment approach be working towards providing environmental, social or ethical benefit.
So what separates the two lists? Whilst all are worthy, some are more worthy than others. The holdings os the funds we rank as “Top of the Pops” don’t have any controversial activities linked to them, whereas some of the underlying holdings in the rest of the lost may do. Goodments defined controversial activities as short term and/or one-off incidents or issues that the company has exposure to. This exposure will not necessarily constitute an ingrained business behaviour or involvement in a sector that deems the company to be in direct conflict with exclusion but might include unethical conduct, being linked to legal disputes, or operating in countries with poor human rights records.
Data as at 17 Aug 2019. Responsible funds scores are awarded based on the scores of the underlying companies that the funds invest in.