As I gear up for my next portfolio review at the end of June, I poked around As You Sow’s website to determine if there were any new candidates for my sustainable investing strategy. I began by looking for any mutual funds or exchange-traded funds (ETFs) with fossil fuels grades of A or B. This produced a list almost exclusively of mutual funds, which I am not currently investing in. I started considering a few of them, until I saw their expense ratios. My cutoff for expense ratios is 0.60%, and many of these funds were above 1.00% or even 3.00%—anything this high is the same as throwing my investment dollars into a pit and lighting them on fire!
Not to be defeated by how difficult it has been to find investments that are actually sustainable, I looked at my Charles Schwab brokerage account to see how my current ETF holdings were performing. One of my ETFs in the green, but not the best performer right now, is the VanEck Biotech ETF (BBH). It has all A grades on As You Sow—making its positive performance even better knowing that by investing in this group of companies, I am not killing the earth! This got me thinking that VanEck might have some other good candidates for my portfolio.
At the VanEck fund family page on As You Sow, it displays all funds that are gradable in its database. Since I’m searching based on a high fossil fuels grade, I can see that grade in the last column on the list of funds and narrow my choices based on it.
The VanEck Semiconductor ETF (SMH) has all A grades except for gender equality, which is D. No surprises here, the technology industry has a long way to go before it is equal for women and all genders, but I’m looking for a gender equality grade of C or higher for my portfolio. The VanEck BDC Income ETF (BIZD) looked promising with all A’s but an N/A for gender equality since there wasn’t enough data for a grade. Technically this fits my strategy, so I went over to AAII.com to determine if it was a good fit based on performance and expense ratio in the ETF Evaluator. Though its performance has been steady, its expense ratio is an alarming 11.17%! That performance is certainly not worth 11% of my portfolio’s value, so this ETF is off the list.
I scrolled further until I found the VanEck Environmental Services ETF (EVX), with a fossil fuels grade of B. The rest of its grades are A except for—you guessed it—gender equality at C. This fits my strategy, so let’s all cross our fingers and hope the expense ratio won’t eat into all this investment’s potential …
This expense ratio of 0.55% comes in just below my cutoff of 0.60%! VanEck Environmental Services has earned a potential spot in my portfolio, as it also has average performance over the long term (grades of C) and an A grade for the most recent quarter.
I will perform a similar search to see if I can find anything better when it’s time for my portfolio review. I have a little more peace of mind knowing that there are some hidden gems that will fit my strategy—I just have to do more digging!
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