Best ESG funds for responsible investing from Kiplinger. The review is written by Coryanne Hicks. Her picks include equity, fixed income and balanced funds. What individual sustainable stocks might be good to look at for a post-pandemic recovery. Our friend Tim Nash at Corporate Knights favours Unilever and Cisco. has been thinking about that too

PODCAST: Best ESG Funds for Responsible Investing

Transcript & Links, Episode 33, June 5, 2020

Hello, Ron Robins here. Welcome to podcast episode 33 published on June 5 titled “Best ESG Funds for Responsible Investing”— and presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.

Remember that you can find a full transcript, links to content – including stock symbols and bonus material – at this episode’s podcast page located at investingforthesoul.com/podcasts.

And Google any terms that are unfamiliar to you.

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Best ESG Funds for Responsible Investing

Well, we have another good review of the best ESG funds for responsible investing from Kiplinger. It’s written by Coryanne Hicks and is titled 15 Best ESG Funds for Responsible Investors.

Here are the recommended funds. Now this will be a little taxing to listen too. If it’s too much, just go to this podcast’s page to read and to get the fund links.

Now, I’ll first mention the fund names and then follow that with selected quotes from the article pertinent to each fund. So, listen up!

1) Equity Funds

Vanguard Fund

“Vanguard FTSE Social Index Fund Admiral (VFTAX) [It’s] one of the least expensive socially responsible funds available. Morningstar Director Alex Bryan says the Vanguard FTSE Social Index Fund Admiral is geared toward ‘investors who want a broadly diversified portfolio without exposure to firms operating in controversial industries.’

iShares Funds

iShares MSCI Global Impact ETF (SDG). Kostya Etus, director of research at Orion Portfolio Solutions in Omaha, Nebraska, says ‘the iShares MSCI Global Impact ETF is composed of companies around the world who base their operations to further the United Nations’ Sustainable Development Goals,’ she says. These 17 goals include clean energy, eliminating poverty and hunger, education for all and stopping global warming.’

iShares ESG MSCI USA ETF (ESGU) is a passively managed ESG fund that tracks the MSCI USA Extended ESG Focus Index. This benchmark takes the MSCI USA Index of large- and mid-cap American companies and whittles it down to ‘positive’ ESG companies by excluding firms in the tobacco or civilian weapons industries, as well as firms that have suffered through ‘very severe business controversies.’

iShares ESG MSCI EAFE ETF (ESGD). If you want international diversification but emerging markets feel too risky, you can invest in the developed world via the iShares ESG MSCI EAFE ETF. [It] invests in the developed nations of Europe, Australasia and the Far East (EAFE)… no single company makes up more than 3% of the portfolio.

Parnassus Funds

Parnassus Core Equity Fund Investor (PRBLX) ‘From an ESG perspective, Parnassus believes that quality companies with strong social, environmental and corporate governance practices are better positioned to understand and manage risks, reducing [the] probability of adverse outcomes and controversies,’ says Celia Cazayoux, a senior investment manager at Parnassus Investments.

Parnassus Mid Cap Fund Investor (PARMX). This solid option for ESG exposure to mid-cap stocks has earned five stars and a Silver rating by Morningstar, and has been lauded for its ‘talented stock-pickers’ and ‘disciplined, well-executed approach.’

Nuveen Funds

Nuveen ESG Large-Cap Value ETF (NULV). The Nuveen ESG Large-Cap Value Fund tracks the TIAA ESG USA Large-Cap Value Index… The ESG value index has outperformed the traditional value index every year since 2015.

Nuveen ESG Small-Cap ETF (NUSC), which tracks the TIAA ESG USA Small-Cap Index, which applies ESG criteria to the MSCI USA Small Cap Index. The 640-holding portfolio is thickest in information technology stocks (18%), health care stocks (15%), and industrials (15%), but it offers exposure to every sector – which isn’t necessarily a win, depending on what your ESG values are.

2) Clean Energy Funds

iShares Global Clean Energy ETF (ICLN). Some investors might home in on specific ESG issues, such as clean energy. That has led to the creation of benchmarks such as the S&P Global Clean Energy Index, which tracks a tight group of 30 of the largest clean energy companies from the 11,000-plus stocks in the S&P Global Broad Market Index.

SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX) [Is] another way to invest with clean-energy principles in mind… [it] simply exclude[s] fossil fuels from your portfolio.

3) Emerging Market Fund

iShares ESG MSCI EM ETF (ESGE) provides exposure to emerging markets. It tracks the MSCI Emerging Markets Extended ESG Focus Index, which takes a broader MSCI EM index and excludes tobacco/firearms companies, as well as those involved in ‘severe’ controversies…’

The remaining portfolio of about 300 stocks is most heavily weighted in China (39%), Taiwan (13%) and South Korea (12%).

4) Women’s Leadership Fund

Pax Ellevate Global Women’s Leadership Fund (PXWEX) at nearly $500 million in assets under management, is proof that there’s real investor interest in corporate gender diversity. [Its] portfolio of more than 400 gender-diverse companies outperformed 93% of its global equity peers within the Lipper Global Multi-Cap Core category in the five years ending March 31, 2020.

5) Bond Funds

TIAA-CREF Core Impact Bond Fund (TSBRX). The fund holds investment-grade bonds from companies that are ESG leaders within their industry and/or have direct and measurable environmental or social impact in areas like natural resources, renewable energy and affordable housing.

iShares ESG USD Corporate Bond ETF (SUSC) is another fixed-income ESG fund that’s specifically geared toward corporate debt. Its aim is to optimize exposure to ESG criteria while matching the risk-return characteristics of the Bloomberg Barclays US Corporate Index… the Bloomberg Barclays MSCI US Corporate ESG Focus Index, frowns upon civilian firearm producers and retailers, weapons makers, fossil fuel producers or power generators, and a few other industries.

6) Balanced Fund

Walden Balanced Fund (WSBFX) aims for a 70% to 80% equity allocation, and it was at the lower end of that as of the end of April. At 29% fixed-income exposure, it boasted about twice the allocation to bonds of the category average.

The fixed-income portfolio consists of U.S. government and government-related bonds, corporate bonds, municipal bonds and cash and cash equivalents… The managers apply an ESG screen to holdings.” End quotes.

Again, for review, go to this podcast’s page at investingforthesoul.com/podcasts and scroll down to this podcast.

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Two ESG Stocks for Responsible Investors

Some of you might be wondering what individual sustainable stocks might be good to look at for a post-pandemic recovery. Our friend Tim Nash at Corporate Knights has been thinking about that too. In an article titled Pandemic Portfolio: Two stocks positioned for an economic recovery – and a second COVID wave, he writes about that. His two picks are Unilever (UL) and Cisco (CSCO).

About Unilever, Mr. Nash writes that “Unilever owns a whole bunch of well-known brands from soaps (Dove) and cleaners (Seventh Generation) to soups (Knorr) and ice cream (Ben & Jerry’s) … The company is positioned to weather an ongoing storm but will also get a boost if the economy reopens quickly… The company’s sustainability reporting is top-notch and measures progress on issues like gender diversity, the health and hygiene of consumers and carbon emissions… Unilever’s share price fell by 27% during the crash and is currently down about 11% since the start of the year. The stock is expected to pay a 3.39% annual dividend.” End quote.

Concerning Cisco, Mr. Nash says that “Cisco is an American tech company that earns most of its revenue from selling infrastructure platforms made up of networking hardware like routers, switches and data centres. As more business happens online, Cisco has diversified to offer applications, security and technical support services… The company gets top marks from sustainability data providers Sustainalytics and MSCI, and is ranked fourth on the 2020 Corporate Knights’ Global 100 list of the world’s most sustainable corporations… Cisco’s share price fell by 33% during the crash and is currently down about 11% since the start of the year. The stock is expected to pay a 3.2% annual dividend.” End quote.

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End Comment

Well, these are my top news stories and tips for this podcast: Best ESG Funds for Responsible Investing.

And to get all the links, stock symbols, and more, or to read the transcript of this podcast and with additional information too, please go to investingforthesoul.com/podcasts and scroll down to this episode.

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Thank you for listening.

Talk to you again on June 19. Bye for now.

© 2020 Ron Robins, Investing for the Soul.