Star Herald: “Interested in Sustainable Investing? Look Outside Your 401(k)”
Star Herald, May 17, 2021Investing in a greener planet and more equitable society sounds good on paper, but what does it mean in practice? Historically, adding sustainable investments to your portfolio was no easy task: Fees were high, funds were few and far between, and 401(k)s didn’t offer them. Now, fees have dropped, there are more sustainable funds than ever, and the Biden administration has announced that it won’t enforce a previous ruling that largely excluded environmental, social, and governance, or ESG, funds from 401(k)s.”
For insights into investing in ESG funds, she turned to Marguerita Cheng, CFP® Pro, and chartered counselor in SRI (sustainable, responsible, and impact investments).
About ESG funds: These mutual funds are graded using ESG principles. ESG funds invest in companies with business practices that allow them to have a sustainable and societal impact in the world. Some ESG funds are broadly focused, while others are fairly specific. For example, the SPDR S&P 500 Fossil Fuel Reserves Free ETF allows investors to invest in companies that don’t own fossil fuel reserves.
Marguerita explains: “Sustainable investors can really tailor their portfolios to their values,” she says. “What may be socially responsible for one person may not be for another because this is very personal. So people have the ability to focus on issues near and dear to their heart, whether that’s gender equality, companies that provide domestic benefits, that champion LGBTQ communities, or that support Black Lives Matter. ESG ETFs, or exchange-traded funds, have become more popular since they make sustainable investing more accessible and affordable than other types of mutual funds. ETFs can be traded on an exchange like a stock, but offer the diversification of a mutual fund.”