It is imperative for investors to understand the significance of socially responsible funds. Especially during tough times that include the ongoing virus, but issues that have been in existence for decades now – like global warming, ozone depletion, excessive pollution and degrading natural resources, are essential that investors take upon investing in assets that match sustainability standards.
Various companies in the US meet the environmental, social, corporate, and governance criteria, ensuring that their assets are socially responsible and sustainable. These companies meet the standards of the United Nations global compact principles.
Here is a list of the 5 best socially responsible and sustainable funds that a socially conscious investor must invest in –
1 The Fidelity International Sustainability Index Fund (FNIDX):
FNIDX is a fund that invests in both growth and value-oriented equities in the international market. Most of the securities part of the FNIDX are a part of MSCI ACWI ex USA ESG Index, which is known as a capitalisation-weighted index offering investors the exposure to large and midcap companies functioning in developing and emerged markets. These companies have a high ESG performance, and FNIDX as a fund is a low-cost investment offering socially responsible and sustainable investment options with a 3-year average return of 7.4%. This is the right fit for investors looking for a tilt towards SRI without much performance dispersion.
2 Calvert US Large-Cap Core Responsible Index Fund (CISIX):
Calvert is known for its robust corporate engagement backed with authenticity. Most Calvert index stock funds have extremely low fees with broad diversification, especially the Calvert Large-Cap US Core Index Fund Institutional Shares. They have a comprehensive process involving a criterion that measures ESG factors and meets socially responsible investing principles. They have a 100% proxy vote for climate change and gender pay equity. It holds 88% lower fossil fuel reserves, 100% lower tobacco exposure, and 83% fewer toxic emissions when compared to Russell 1,000.
3 Shelton Green Alpha Fund (NEXTX):
NEXTX’s main aim is to find environmentally conscious companies that have proven their abilities to manage environmental risk vividly with above-average growth potential. It is always on the lookout for companies that pay a high focus on ecological uplifting as a core part of their corporate social responsibility. Managed by investors who believe in a green economy, it consists of companies that put emphasis on improving human wellness with reduced environmental risk. Such companies promote an efficient and sustainable economy with consistent growth, with resilience as an essential factor. This fund is used for all the diversified mutual fund portfolios specially tailored for clients who wish to contribute to the betterment of the environment.
4 Vanguard ESG US Stock ETF:
The Vanguard fund invests in assets matching global sustainability standards. Any US company that meets environmental, social, corporate and governance criteria are added to the fund. Holding over 1,400 stocks, including Apple, Microsoft Corp, Amazon, and more, it excludes companies that do not meet the UN global sustainability standards. Its low expense ratio and exceptional performance have been attracting more and more investors to take up this fund as an important asset.
5 Socially Responsible Balanced Fund (SSIAX):
The particular fund focuses on aiming for undervalued securities having long-term investment goals with strong sustainability traits in support of the environment. It excludes all companies that directly link to fossil fuel and promotes companies with fair employment practices, solid human rights systems, and more. The balance fund includes 65% equities and a 25% of fixed income allocation with 10% cash holdings. It is suitable for investors looking for an asset mix in a single fund.
Concluding Note:
Sustainable investing has been on a powerful rise for quite some time now. It helps manage risk in uncertain times, and it definitely has a bright future scope. Every individual should take up the responsibility to work towards the sustainability of our environment, people, and surroundings in whichever way possible – and investing in socially responsible funds are considered an excellent step towards it. More and more fund companies are getting into the game of sustainable investing and are giving more priority to firms that have a robust social responsibility undertaken. This makes investing options for investors broader and more diversified.
72% of all the sustainable equity funds ranked in the top halves of all the 26 ESSG index funds in the first half of 2020, when the markets were the most volatile. They outperformed most of their traditional and conventional index substitutes. Additionally, 53% of investors who regularly invest in socially responsible funds management reported exceptional performance of funds only because they invested in sustainable, responsible investment funds. The statistics, data, and investors’ opinions signify the benefits of investing in socially responsible funds that add to your profits and help in social upgrading.
