{"id":46376,"date":"2018-05-01T12:29:12","date_gmt":"2018-05-01T16:29:12","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=46376"},"modified":"2018-05-01T12:44:19","modified_gmt":"2018-05-01T16:44:19","slug":"socially-responsible-investing-isnt-cut-dry","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2018\/05\/socially-responsible-investing-isnt-cut-dry\/","title":{"rendered":"Socially Responsible Investing Isn't Cut and Dry"},"content":{"rendered":"<p style=\"margin: 0 0;\"><a href=\"http:\/\/www.ino.com\/blog\/meet-matt-thalman\/\"><img loading=\"lazy\" decoding=\"async\" src=\"\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/MattThalman_Contributor_ImageBadge350.png\" alt=\"Matt Thalman - INO.com Contributor - ETFs - Socially Responsible Investing\" width=\"350\" height=\"131\" class=\"alignleft size-full wp-image-30497\" style=\"padding-top: 10px;\" srcset=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/MattThalman_Contributor_ImageBadge350.png 350w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/MattThalman_Contributor_ImageBadge350-300x112.png 300w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/MattThalman_Contributor_ImageBadge350-270x100.png 270w\" sizes=\"(max-width: 350px) 100vw, 350px\" \/><\/a><\/p>\n<p style=\"margin: 0 0;\"><br style=\"clear:both;\"><\/p>\n<p>When it comes to investing in socially responsible companies, a lot depends on what values and principles you hold in high regard when you are trying to find the right fund for you.<\/p>\n<p>Socially responsible or ethical investing encompasses a wide range of sub-sectors which you need to sift through before just jumping into an \u201cethically responsible\u201d fund. For example, there are environmentally focused funds, funds that concentrate their efforts on finding companies who have sound corporate governance policies, others that look at the impact a business has on society as a whole, and this is just to name a few. <\/p>\n<p>One fund that may be \u201cethical\u201d and may not be would be the <strong>Inspire Global Hope Large-Cap ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/PACF_BLES\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(BLES)<\/a><\/strong>. The fund tries to find companies which the fund manager believes to line-up with \u201cbiblical values\u201d and even has a proprietary scoring system which measures a company\u2019s level of participation in abortion, gambling, alcohol, pornography, \u201cthe LGBT lifestyle,\u201d just to name some of the big topics. But while some people may find some \u201cbiblical-values\u201d ethical, others may not find them to be, one, in particular, being the \u201cLGBT lifestyle\u201d metric.<!--more--><\/p>\n<p>(If LGBT lifestyle is significant to you, maybe take a look at the <strong>Workplace Equality Portfolio ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/PACF_EQLT\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(EQLT)<\/a><\/strong> which owns stocks in firms that support lesbian, gay, bisexual, and transgender employees in the workplace.)<\/p>\n<p>Another example of why investors need to read the fine print when it comes to what a so-called \u201cethical\u201d investment would be the <strong>Global X S&P 500 Catholic Values ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/NASDAQ_CATH\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(CATH)<\/a><\/strong>. This fund tracks an index of US large-cap stocks selected from the S&P 500 but omits specific industries that are at odds with Catholic values. Seems straightforward! Well while the ETF has zero tolerance for companies with any revenues from unconventional weapons, contraception, abortion, stem-cell research and pornography, it will own firms that have a maximum of 50% of income derived from sales of conventional weapons.  <\/p>\n<p>One fund called the <strong>Wisdom Tree China ex-State-Owned Enterprise Fund <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/NASDAQ_CXSE\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(CXSE)<\/a><\/strong>, which owns stocks, like its name says, are Chinese companies that are not state owned, actually defines state ownership as the government owning less than 20% of a company. <\/p>\n<p>I also always find it funny that the <strong>iShares MSCI ACWI Low Carbon Target ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/PACF_CRBN\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(CRBN)<\/a><\/strong>, which is an ETF that invests in companies who have a lower carbon footprint than the broader market, has Amazon.com (AMZN) as one of its top five holdings. While most people would probably agree that Amazon.com itself is a low carbon footprint company today, we need to remember that Amazon pays companies like FedEx (FDX) and United Parcel Services (UPS), two companies with massive carbon footprints, to ship its merchandise. Plus, Amazon is flirting with the idea of bringing most of its shipping in-house, which would certainly not make it a carbon-friendly company.<\/p>\n<p>The list of contradictory \u201cethical\u201d ETF\u2019s can go on, but my point of highlighting these ETF\u2019s is not to pick a side or bash the values their fund managers have deemed important, it is simply to prove you can\u2019t judge a book by its covers, or an ETF simply by its name.<\/p>\n<p>We also need to remember that fund managers and investors can\u2019t control what a certain company does or how its management team behaves and thus need to understand incidents will happen. The recent scandals like Facebooks (FB)> data issues or Starbucks (SBUX) racial profiling incident in a Philadelphia location are perfect examples of how despite your intentions of owning \u201cethical\u201d companies, you may not always be owning shares of \u2018just the good guys.\u2019 <\/p>\n<p>If you own shares of the <strong>iShares MSCI KLD 400 Social ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/PACF_DSI\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(DSI)<\/a><\/strong>, you own shares of Facebook and Starbucks, (or you at least did a few weeks ago). Facebook was the funds second-largest holding, at 3.5% of the fund's assets. When the Facebook scandal broke, there were roughly 80 \u2018socially responsible\u2019 funds which had Facebook as one of their top ten holdings. <\/p>\n<p>Lastly, perhaps you want to own a basket of the more \u201cethical\u201d companies and ensure that you have weeded out most of the \u201cvice\u201d stocks. Well, then you should take a look at the <strong>iShares MSCI EAFE ESG Optimized ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/NASDAQ_ESGD\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(ESGD)<\/a><\/strong> or the <strong>iShares MSCI EM ESG Optimized ETF <a href=\"http:\/\/club.ino.com\/trend\/analysis\/stock\/NASDAQ_ESGE\/?mktcode=tradersblogsymbols\" rel=\"noopener\" target=\"_blank\">(ESGE)<\/a><\/strong>. These are broad \u201cethical\u201d ETF\u2019s that focus on developed markets ESGD and emerging markets ESGE. The stocks they hold have been picked based on positive environmental, social, and governance characteristics. Each of these funds has low expense ratios (0.20% and 0.25% respectively) and have performed well over the last year (up 17.9% and 22.28% respectively).<\/p>\n<p>At the end of the day, we all have different beliefs of what is and what is not ethical. So, do a little research into the so-called ethical fund's actual holdings before just blindly buying based on the name or its investment guidelines. <\/p>\n<p><a href=\"http:\/\/www.ino.com\/blog\/meet-matt-thalman\/\" target=\"_blank\">Matt Thalman<\/a><br \/>\nINO.com Contributor - ETFs<br \/>\nFollow me on Twitter <a href=\"https:\/\/twitter.com\/mthalman5513\" target=\"_blank\">@mthalman5513<\/a><\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">Disclosure: This contributor held positions in Facebook, Amazon.com, and Starbucks.  at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.<\/span> <\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>When it comes to investing in socially responsible companies, a lot depends on what values and principles you hold in high regard when you are trying to find the right fund for you. Socially responsible or ethical investing encompasses a wide range of sub-sectors which you need to sift through before just jumping into an [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":15,"featured_media":46379,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[7522,7770,9352,9354,9351,9357,9356,9355,6928,9350,9353],"class_list":["post-46376","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ino-com-contributors","tag-etf-investing","tag-etf-investing-strategy","tag-global-x-sp-500-catholic-values-etf-cath","tag-inspire-global-hope-large-cap-etf-bles","tag-ishares-msci-acwi-low-carbon-target-etf-crbn","tag-ishares-msci-eafe-esg-optimized-etf-esgd","tag-ishares-msci-em-esg-optimized-etf-esge","tag-ishares-msci-kld-400-social-etf-dsi","tag-matt-thalman","tag-wisdom-tree-china-ex-state-owned-enterprise-fund-cxse","tag-workplace-equality-portfolio-etf-eqlt"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - 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