No cost to fossil free investing between 1927 and 2016, says new study. Two top renewable energy stocks in solar power. ESG funds showing outperformance compared to non-sustainable counterparts. Many ESG funds growing fast and attracting substantial assets. Green bond issuance makes new highs. Best US robo advisors for ethical and sustainable investors. And more
Transcript & Links September 27, 2019
Hello, Ron Robins here. Welcome to my podcast Fossil Free Investing, ESG Profits, and more… September 27, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.
Investment ideas in these podcasts are generally gleaned from market participants in the US, Canadian, UK, European, Asian and Australasian financial markets.
And, Google any terms that are unfamiliar to you.
Also, you can find a full transcript, live links to content, and often bonus material to these podcasts at their episodes’ podcast page located at investingforthesoul.com/podcasts.
Now to this podcast!
Fossil Free Investing
Most of us listening to this podcast believe that fossil free Investing might not be a good long-term investment – for many reasons. However, we might not know the details. Well, under the title, Fossil Fuel Divestment: The Financial Case, by Katelyn M. Kriesel, of Hansen’s Advisory Services, and president of The Sustainable Economies Alliance, Ms. Kriesel provides a detailed study on those details!
Ms. Kriesel says this, and I quote, that, “We compare financial performance of investment portfolios with and without fossil fuel company stocks over the period 1927 — 2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits.” End quote.
Thus, we have a compelling case for fossil fuel investing!
Continuing on a related theme, Maxx Chatsko of The Motley Fool has his top solar power energy stock picks in a post titled, 2 Top Renewable Energy Stocks in Solar Power, appearing on Nasdaq.com. In my last podcast, Mr. Chatsko picked his top wind energy stocks. By the way, his new stock picks were top choices for analysts in my previous podcasts. It just shows the potential for these stocks.
He has this to say about SolarEdge, I quote, “The company develops integrated inverter systems that maximize power output from solar panels and reduce the cost of electricity produced… In the last six quarters, SolarEdge has acquired a provider of uninterruptible power supplies, a maker of lithium-ion batteries, and even a company that develops powertrain and electronics for electric vehicles. That shows the company is eager to maintain and expand its presence in the clean energy markets. With shares trading at just 17 times future earnings after a recent pullback, investors with a long-term mindset might find plenty to like about this solar stock.” End quote.
On Enphase Energy, Mr. Chatsko writes, that, “Enphase Energy… develops and supplies microinverter solutions that help maximize the electricity output from solar modules… Enphase, the leader in microinverters, delivered $24.6 million in operating income in the first six months of this year, compared with an operating loss of $3 million in the first half of 2018…
Enphase… is preparing to launch the first products with the next-generation IQ 8 microinverter, which boasts a 31% increase in computing power versus [its] IQ 7. That could allow for smaller, more efficient, and even simpler products for customers. Throw in the expected launch of residential energy storage products by the end of 2019, and this solar stock could have multiple growth opportunities.” End quote.
More ESG stock picks come from Evan Harvey, Global Head of Sustainability at Nasdaq. They appear in a post titled, This Correlation Between ESG Investing Scores And High Returns May Surprise You, written by Alissa Coram and Justin Nielson on the Investors Business Daily site.
On Akamai Technologies, Mr. Harvey says, “Akamai stock is all about the infrastructure for the internet as the largest content delivery network service provider. Between security solutions, e-commerce, and video streaming, they touch on a lot of areas seeing massive growth.” End quote.
Concerning Texas Instruments, he says, quote, “Semiconductors are notoriously cyclical so it helps to understand where you are at in the chip cycle. They started the year out great but have had a tough time since China trade war concerns have intensified. But with optimism on the direction of talks on tariffs, chip stocks started showing relative strength.” End quote.
And on Comcast, Mr. Harvey says, that, “Comcast is a great example of how top-rated companies exist in the ESG space. While many people focus on the impact of cord-cutting on Comcast’s cable business, it’s just as important that the cord-cutters still need internet service. Comcast is offsetting losses in video subscriptions with gains in broadband subscriptions. The profit margins on broadband are much higher, leaving little incentive to fight for the lower-value video subscriptions. With a push for expansion in wireless mobile, it’s a very different bundle that Comcast stock will be pushing in the future.” End quote.
Because ethical and sustainable investing is gaining mainstream acceptance, it’s not surprising to read Sanghamitra Saha of Zacks, article, titled, 6 ESG ETFs Close to or Above the $1B Asset Mark, found on Yahoo! Finance. Ms. Saha reviews each of the six ESG ETFs. Here’s what she says about each one. Quote,
“1) The iShares ESG MSCI USA Leaders ETF (SUSL) — AUM $1.61 billion… comprises U.S. large and mid-capitalization stocks of companies with high ESG performance relative to their sector peers. It charges 10 bps in fees.
2) iShares MSCI KLD 400 Social ETF (DSI) — AUM $1.55 billion… is a free float-adjusted market capitalization index designed to measure the equity performance of U.S. companies that have positive ESG characteristics. The fund charges 25 bps in fees.
3) Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG) — AUM $1.50 billion… is a capitalization-weighted index that provides exposure to companies with high ESG performance relative to their sector peers. The fund charges 10 bps in fees.
4) iShares MSCI USA ESG Select ETF (SUSA) — AUM $1.18 billion… comprises U.S. companies that have positive ESG characteristics. The fund charges 25 bps in fees.
5) iShares ESG MSCI EAFE ETF (ESGD) — AUM $969.5 million… comprises large and mid-capitalization developed market equities, excluding the U.S. and Canada that have positive ESG characteristics. The fund charges 20 bps in fees.
6) iShares ESG MSCI U.S.A. ETF (ESGU) — AUM $967.05 million… comprises U.S. companies that have positive ESG characteristics while exhibiting risk and return characteristics similar to those of the parent index. The fund charges 15 bps in fees.” End quote.
Now, while on the subject of ESG funds, Annalisa Esposito reports on the Morningstar UK site that, ESG Funds Beat Non-Sustainable Sister Funds, and quoting her, she says that “Investors would do better to pick ESG funds rather than their non-sustainable counterparts, according to research by fund supermarket interactive investor. Morningstar data analysed by the firm reveals that funds taking environmental, social and governance (ESG) factors into account in their investments have performed better than their non-ESG sister funds.” End quote.
Whether the same is true outside the UK hasn’t been demonstrated to my knowledge. However, it’s one more great reason for investing in ethical and sustainable funds compared to their ‘conventional’ equivalents!
For the fixed-income side of your portfolio, green bonds are well worth considering according to many analysts. In an article, Green Bonds Are Getting Hot on Wall Street, ETF Trends features the VanEck Vectors Green Bond ETF (NYSEArca: GRNB). Among green bond funds, the writer of the article states, that, “The VanEck Vectors Green Bond ETF (NYSEArca: GRNB), the first fixed income ETF offering exposure to green bonds, has been a solid performer this year, gaining nearly 4% while currently yielding around 1.3%. Those are modest, but decent numbers, but the appetite for green bonds is increasing and that could bode well for GRNB going forward.” End quote.
Illustrating how big green bond issuance is becoming, financial writer Todd Shriber quotes Bloomberg concerning the huge increase in green bond issuance this year. Bloomberg says, “Global green-bond sales have already beaten last year’s record $135 billion well before the end of 2019. Issuance of the securities has more than quadrupled in the past five years, according to data compiled by Bloomberg.” End quote.
To help US ethical and sustainable investors create stock and bond portfolios reflecting their personal values, Investopedia just announced its Best 2019 Robo-Advisors for Socially Responsible Investors. It concluded the four best are:
- M1 Finance Read review
- Motif Investing Read review
- Interactive Advisors Read review
- Personal Capital Read Review
For links to these robo advisors see this podcast’s webpage. Go to investingforthesoul.com/podcasts and scroll down to this edition.
Incidentally, there is another – and some would say preferable – simple and cheap way to create a portfolio that aligns your investments with your values. Check-out my one-hour DIY Ethical-Sustainable Investing Pays Tutorial. Go to investingforthesoul.com/podcasts and look down the right-hand sidebar for the link.
So, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.
Again, to get all the links or to read the transcript of this podcast and sometimes get additional information too, please go to investingforthesoul.com/podcasts and scroll down to this episode.
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Now, a big thank you for listening.
Come again! And my next podcast is scheduled for October 11. See you then. Bye for now.
© 2019 Ron Robins, Investing for the Soul.