The sustainable-investing movement is picking up momentum. Here’s how to participate.
Should your portfolio align with your notion of corporate responsibility? If you think it should, join a small but rapidly expanding population of ESG investors, those sensitive to the environmental, social and governance qualities of the companies that use their capital. This three-part guide delivers:
— a directory of the best ESG stock funds,
— an explanation of the competing scorecards for corporate benevolence and
— a recipe for combining responsible investing with a tax break.
Before diving in, think about what you are trying to accomplish. This is how Michael Jantzi, founder of the ESG rating firm Sustainalytics, puts it: “What’s the motivation? Are you looking to improve investments or improve the world?”
Some socially conscious investors aspire to do both. Perhaps it is possible to create an outperforming portfolio by avoiding the worst polluters, harshest employers and most shareholder-unfriendly managements. But it’s unrealistic to count on that outcome.
Until recently, sustainable funds have had the wind at their backs. It has been a time when, for reasons that have nothing to do with responsible investing, environmentally benign software companies have done better on Wall Street than stodgy oil companies.
Consider the iShares MSCI KLD 400 Social exchange-traded fund, one of the older responsible-investing portfolios. Its largest positions are in Microsoft, Alphabet and Tesla. In the past decade KLD has delivered an annual return of 14.4%, Morningstar reports, edging out the Vanguard Total Stock Market ETF’s 14.2%. Lately, though, the oil producers have done well while hot digital companies have cooled off.
MONEY COMING INTO ESG FUNDS
Even without getting a boost in returns, or with no expectation that oil companies can be goaded into discovering renewable energy, the adherent of ESG investing might want to take a symbolic stance. Says Jon Hale, director of sustainability research for the Americas at Sustainalytics: “There’s an expressive benefit, like with the purchase of a hybrid or electric vehicle. Sustainability concerns are one of the things that express who I am.”
Since 2012 the assets of what Morningstar classifies as sustainable funds (equity and fixed income combined) have exploded from $5 billion to $357 billion. Still, that’s only 1.2% of the asset total for U.S.-domiciled funds.
Daniel Worthen, senior director at Simon-Kucher & Partners, marketing consultants to the financial services industry, says that demographics favor the ESG movement. “Socially conscious investing is higher on the agenda of the generation that doesn’t yet control the preponderance of investable assets,” he says. Expect more from this sector as the baby boomers pass their wealth on.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
