A New Type of Green: Socially Responsible ETF Investing


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The American Green: Socially Responsible ETFs

Why should we be socially responsible?

From the moment Al Gore’s “An Inconvenient Truth” hit the screens in May 2006, people have grown more aware of the crummy state our planet is in.

Sure, it has become a political hot button but if we look past all of that, and simply consider the facts there is common ground.

When you consider how you allocate your investments and manage your portfolio in a more socially responsible way, you are contributing to the betterment of our world and reducing personal risk through diversification of your portfolio.

There is a wide range of investment vehicles that will allow you to invest in a socially responsible way.

The method we’re looking at today is ETFs.

What are ETFs?

ETFs or Exchange Traded Funds are investments structured much like mutual bonds. The difference between the two lies within the trading process.

ETFs are traded in the same way as stocks are. They are designed to track an index, which makes them (mostly) passively managed, as opposed to mutual funds, which are considered to be actively managed.

As ETFs emerged and became more popular, the market grew bigger. It can now be divided into a variety of asset classes and investment styles – our number one are socially responsible ETFs.

Within the range of sustainable investing, there are multiple strategies to maximize financial returns and maximize social value.

According to USSIF, these can be categorized into four big groups:

  • Positive screening: selecting companies or projects based on criteria they meet
  • Negative screening: excluding investments in certain companies or projects because ofcontroversy or negative social impact
  • ESG Integration: inclusion of ESG factors into the financial analysis
  • Themed Investing: selection of companies/projects based on themes (social justice, clean technology, alternative energy, avoiding companies that produce/sell addictive substances)The broad selection of themes makes ethical ETFs the ideal must-haves for every investor’s portfolio.


Our Top 4 “Green” ETF Selections

1. Etho Climate Leadership U.S. ETF (ETHO): focus on companies with the least carbon impact within their respective industries

2. SPDR SSGA Gender Diversity Index ETF (SHE): focus on companies that strive to diversify the leading positions within their industries and promote gender equality

3. iShares MSCI KLD 400 Social ETF (DSI): focus on companies that actively strive towards positive environmental and social change

4.  iShares MSCI ACWI Low Carbon Target (CRBN):  seeks to track the investment results of an index composed of large and mid-capitalization developed and emerging market equities with a lower carbon exposure than that of the broad market.

Whether you are just starting out or you are a seasoned investor, ETFs will grant you the opportunity to diversify your portfolio and effect positive social change.

If you’d like us to put together a Socially Responsible Portfolio here at NetPicks ETF Investor, or at least track some of the ETFs mentioned above just let us know in the comments below.  You can also send us an email through our contact page.

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