My Move to Socially Responsible Investments
The author’s method of finding and switching a majority of his investments to socially responsible funds to aid in the fight against climate change
I’ve been working to take actions to be more environmentally sustainable across parts of my life in the last few years especially like reducing my meat consumption and use of plastic in the kitchen. Investing was one area that I hadn’t approached yet and believe it can make a big difference in the fight against climate change.
Towards the end of 2020 I decided it was time to make the switch to Socially Responsible Investments (SRI) across most of my retirement and personal investment accounts.
This is an overview of the options I found within my 401k and other personal brokerage accounts. Hopefully this will be helpful to people in a similar situation as mine (American investor with a good employer-based 401k plan) . However, I do realize that personal finance and investing can be very different for people so please do your own research and work with a professional advisor if you’re unsure.
Methodology
My overall plan was to look at what options there were for SRI mutual funds and ETFs in the brokerages where I had my money currently invested. I looked for products that matched as closely as possibly my current investments which are 5 main categories:
- US Total Market Index Funds
- International Total Market Index Funds
- US Bond Index Funds
- Inflation Protected Bond Index Funds
- Real Estate Index Funds
These categories were what I choose after reading The Intelligent Investor when I was looking to take more control over my retirement investment strategy around 2015. Rather than just leaving my 401k accounts in one of my employer selected “retirement year” funds.
As you can see from the list above I mainly targeted index funds that track either the total US market or International markets. These funds also typically come with very low expense ratios.
My methodology for switching from current funds to the new ones was to use dollar cost averaging, by selling the old and buying the new funds monthly over 24 months.
Fidelity Netbenefits Employer 401k Plan
My former employer’s 401k plan with Fidelity Netbenefits that I still have some money in ended up having a social index fund:
- VFTNX — Vanguard FTSE Social Index Fund
So I’ve started transferring ~5% monthly from the other fund I had invested in another fund to this one.
Fidelity Brokeragelink 401k Account
A majority of my retirement 401k savings are in a Fidelity “brokeragelink” account, which is a program offered by my former employer where I was able to move my 401k savings from the basic Netbenefits account which only had maybe 30 fund options to a full featured Fidelty brokerage account. Where I have a choice of 1000's of Mutuals Funds, ETFs, and Stocks.
This took a bit more research to find the funds I wanted to transfer to from an SRI standpoint. Fidelity’s tools made it fairly easy though once I found the right search tool and used it’s options to filter by Socially Responsible and No Transaction fee funds:
This gave me 170 funds to choose from. It also then lets you sort by Expense Ratio to find the funds with the lowest, which I prefer.
Here are my choices and moves that I came up with after this research:
US Total Market Index Funds
Previous fund:
- FSKAX — Fidelity Total Market Index Fund
New funds:
- FITLX — Fidelity U.S. Sustainability Index Fund
- CSXAX — Calvert US Large Cap Core Responsible Index Fund Class A
- CMJAX — Calvert US Mid Cap Core Responsible Index Fund Class A
International Total Market Index Funds
Previous fund:
- FSPSX — Fidelity International Index Fund
New funds:
- FNIDX — Fidelity® International Sustainability Index Fund
- CDHAX —Calvert International Responsible Index Fund Class A
US Bond Index Funds
Previous fund:
- FXNAX —Fidelity® U.S. Bond Index Fund
New fund:
- FNDSX —Fidelity® Sustainability Bond Index Fund
Inflation Protected Bond Index Funds
Previous fund:
- FXNAX — Fidelity® Inflation-Protected Bond Index Fund
New fund:
N/A — I was not able to find any SRI versions of the inflation protected bond index fund, and therefore elected to keep these positions of mine intact until an SRI type fund becomes available.
Real Estate Index Fund
Previous fund:
- FSRNX —Fidelity® Real Estate Index Fund
New fund:
N/A — I was not able to find any SRI versions of the real estate index fund, and therefore elected to keep these positions of mine intact until an SRI type fund becomes available
Other Funds
These I chose out of interest in diversifying some from my initial basic portfolio
- FSLEX — Fidelity® Select Environment and Alternative Energy Portfolio
- DSI — ISHARES FTSE KLD 400 SOCIAL INDEX FUND
- CRBN — ISHARES MSCI ACWI LOW CARBON TARGET ETF
Schwab Personal Brokerage Account
This is where I direct any of my additional savings from income that I have not put away as an emergency fund or for another reason. I have a mix of lower risk retirement accounts and more risky securities based “fun” account. The “fun” portion of this account makes up less than 2% of my total investments.
Again on the mutual fund side I looked for products that are socially responsible and have a low expense ratio and no fees to trade. These can be found using a similar mutual fund search tool as Fidelity. Schwab’s tool even has a “predefined screen” as they call it for Socially Responsible Mutual Funds.
Unfortunately I wasn’t successful (website error) in getting a list of results from this site without being logged in to my account even though it looked like I should be able to. So I have not included any screenshots of search results after I was logged into my account to protect any intellectual property.
SRI Mutual Funds
- TICRX — TIAA-CREF Social Choice Equity Fund (Retail)
- TSBRX — TIAA-CREF Core Impact Bond Fund (Retail)
SRI ETFs
- ICLN — iShares Global Clean Energy ETF
Stocks
- AMRC — Ameresco Inc
- BYND — Beyond Meat Inc
- CSIQ — Canadian Solar Inc
- SGBSY — Schneider Electric SE
- TILE — Interface Inc
- VWDRY — Vestas Wind Systems A/S
The stocks in this list I have researched and chosen mainly after reading the great book from Project Drawdown which details 100 solutions to:
…reach ‘Drawdown’ — the point in the future when levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline, thereby stopping catastrophic climate change — as quickly, safely, and equitably as possible.”
Conclusion
There are a lot of options out there for the American investor looking to make the switch to Socially Responsible Investments. Many brokerages make it easy with predetermined filters in their search tools. Note that in my experience the biggest downside is that the SRI funds have higher expense ratios than their non-SRI counterparts. For example Fidelity’s FSPSX — International Index Fund has a 0.035% expense ratio, where their FNIDX — Fidelity® International Sustainability Index Fund has an expense ratio of 0.2%. This increase is worth it for my personal goals of Socially Responsible Investment, but they may not be right for everyone.
I hope this helps folks in a similar situation as mine looking to make a switch to Socially Responsible Investments!
Check out more of my articles here on Medium as Nikolas Osvalds and on my personal website:
Disclaimer: This article is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find here and wish to rely upon, whether for the purpose of making an investment decision or otherwise.