If your investment goals include diversifying in sustainable companies, then ESG funds can be an intelligent choice for your situation. But all funds are not created equal, so we will examine critical factors to help you make investment decisions that align best with your personal goals and values.
The Vanguard FTSE USA All Cap Index exchange-traded fund (ETF) is our top pick for an all-around ESG ETF. The Financial Times Stock Exchange Group (FTSE) index is very comprehensive and includes about 1500 different companies.
Our top mutual fund is the Fidelity US Sustainability Index Fund (FITLX), a passive index mutual fund tracking the MSCI USA ESG Leaders Index. That index includes about 300 companies with very high ESG ratings in their sectors.
2. Fidelity U.S. Sustainability Index Fund (FITLX)
3. Vanguard FTSE Social Index Fund Admiral (VFTAX)
The Vanguard FTSE Social Index mutual fund is a low-cost, passive index ESG fund that manages over $3 billion worth of assets. Vanguards flagship ESG mutual fund tracks the FTSE 4 Good U.S. Select Index, comprising approximately 500 individual companies.
The Xtrackers S&P 500 ESG Index ETF is another smart passive index ETF option. SNPE tracks the Standard & Poors (S&P) 500 ESG index, which is very similar to their flagship S&P 500 index, with several industries and companies removed.