What ESG funds do you think are the best and not just repackaged index funds with a markup?
In general I think ESG funds do need scrutiny especially for the additional costs they command, but I’m not really sure how this article helps.
It’s really not clear from this piece what the selected funds are supposedly the best at. Are they the best from an ESG perspective, the best in terms of risk-adjusted returns, the best cost/value? I can’t see any rhyme or reason to it.
I also don’t see how these statements lead to the conclusion drawn.
While passive funds may seem like attractive options because of their low price range, there are many benefits of actively managed ESG funds. For starters, even though actively managed funds underperform their passive counterparts in the stock market, they are available in abundance.
So if you’re looking for a reliable ESG fund with reputable names, you should go for actively managed funds.
Active funds are more expensive and underperform, but there are more of them - so therefore you should go for an active fund? This is also inconsistent with the fact that almost all of the ‘20 best funds’ listed in the article are passive.
Also this sentence makes a problematic implication:
Let’s say you’re a person of color and want to promote equality and inclusion at workplaces.
Anyway to answer the question: broad passive funds with negative ESG screening, they are the cheapest and offer the most diversification.
For sectors other than green tech and energy, I feel like ESG fund investing is a potential contradiction in terms. I don’t dispute that it’s possible to make a decent ROI whilst putting money in things you believe in, but for causes other than energy I think such investing makes more sense at a company level than at a fund level.
The reason green tech and energy are exceptions has nothing to do with the worthiness of the cause, but that that there is solid basis to believe that a financial tipping point will be reached past which the successful clean tech companies will experience incredible revenue growth and down the line profits (offset within a fund by a lot of competitors who fail) and that at sector level the ROI will exceed the market average. For any other causes I happen to believe in, I think my time and passion are more effective vehicles to promote them than putting my money into a fund.
To answer the initial question I do have a small % of my portfolio in INRG and consider it low risk. I have a few individual green energy/tech shares as well which I consider high risk.