We have said many times before: there are hundreds of sustainable funds, and the most important challenge for sustainable investors is finding the right fit. The usual tools the industry uses to define suitability – things like the style box or portfolio breakdowns – just aren’t enough.
We’ve been busy doing our part to help close the gap. As we noted last month, we have greatly expanded our Fund Manager Profiles 2.0 to include more of the kind of information that investors need to make a sustainable fund choice. But we’re also out there monitoring developments in our industry and looking for more ways to share what we’ve learned. Read on for a quick summary.
This month’s blog: Slow and Steady vs Corporate Fast Talking
I know this might shock you, but…companies lie. In the age of information inundation, corporate diversion is depressingly common, creating an environment that feels unsafe and unwelcoming to everyday investors. If you hate lying as much as we do, why invest in it? Why not screen for – and try to steer clear of – all the dirty dirty liars?
In this month’s Till Investor blog post (add link), we talk about 3 important ways that sustainable investing embraces the merits of a slow and steady approach, and how ESG thinking helps investors fight back against corporate spin. The search for corporate honesty, transparency, and accountability is a big part of what draws us to sustainable investing. It also casts an interesting and curious light on the supposed ESG backlash. Read more on Till Investors’ News and Insights page.
Jumping on a Speeding Train
One of the ways we try to meet the needs of potential sustainable investors is keeping up with the growing and constantly changing set of investing options available. In May, for example, we’ll be speaking at the Accelerate 2050 conference, and attending a virtual crowdfunding seminar, SuperCrowd 24. Both conferences are filled with some of the most up-to-speed people in the investing and advising communities.
We have a definite point of view about how to get started as a sustainable investor. Pursuing high-risk or illiquid investments seems like a tough starting point, so we advocate for diverse mutual funds from known providers that have a legitimate track record. These funds aren’t necessarily the most impactful, but they are a relatively safe place to test the waters.
As you climb the ladder of impact, however, it eventually makes sense to look beyond the basics to some of the more impactful and intriguing (and risky) sustainable investment options. We’ll be ready to share what we’ve learned.
What’s a Fighting Style?
For our 2023 book, we developed a concept called Fighting Styles to help potential sustainable investors find fund options that were a proper fit. You can find your own Fighting Style using our short and sassy quiz, and you can see an example of how we apply the Fighting Style concept in one of our ESG101 pieces.
As we updated our Fund Manager Profiles 2.0, we wanted to tie the fund data together with the Fighting Style concept in a direct way. So we started adding Fighting Style information to the profiles, as you can see in the example below.
The important thing to note about the fund-specific Fighting Styles is that funds don’t neatly fall into one style or another. They may have policies that apply to more than one style, or all three. We believe that providing this kind of Fighting Style insight lays a proper foundation for finding options that are suitable to you.
Fund Profile Excerpt for Earth Day 2024: Goldman Sachs Future Equity ETF
In honor of the most recent Earth Day, below you’ll find an excerpt from the fund profile for the Goldman Sachs Future Equity ETF. This profile was initially published on the Equities.com website; you can find the full profile there.
Excerpt:
“The Goldman Sachs Future Planet Equity ETF (GSFP) is their take on an environmentally focused fund, investing specifically in companies that they say are creating solutions to some of our planet’s biggest environmental challenges.
However, context matters, and here the context is that in 2022, Goldman paid $4 million in fines related to ESG greenwashing. So, when looking at this fund, we are going to make extra sure we’re not being misled…
What makes GSFP stand out is its clear focus on the environment based on its five key themes, which are well thought out and explained, and clearly incorporated into the investment process. GSFP therefore has a strongly defined “rewarding” fighting style, while not doing much in the way of “avoiding” or influencing.” However, the elephant in the room is fund performance, which has trailed its benchmark significantly since being launched in mid-2021. While all thematic funds have their ups and downs, we haven’t seen much “up” yet with GSFP. Even on Earth Day, sustainable investors are investors and we can’t ignore poor returns.”
