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Data reveals that consumers increasingly seek to support companies committed to social and environmental causes. For those looking to invest in socially responsible companies, Business Insider highlights several index funds that make it easier to begin.
We’ve previously explained the basics of index fund investing. In short, an index fund groups together individual assets, such as companies, that you can invest in simultaneously. Index funds are an excellent option for beginner investors, providing a diverse and broad portfolio while allowing you to focus on specific types of companies dedicated to causes like sustainability and fair trade.
If that interests you, here are some index funds you can consider, as outlined by Business Insider’s Gus Lubin:
General Funds
: VFTSX tracks US companies excelling in social, human rights, and environmental standards, with a 0.22% expense ratio. Major holdings include Apple, Microsoft, and Alphabet. Meanwhile, ESGD focuses on global companies in developed markets with strong environmental, social, and governance scores, at a 0.40% expense ratio.
Renewable Energy
: Consider investing in QCLN, which tracks green companies on the NASDAQ, with Tesla as its largest holding. Another option is GEX, offering broader global exposure, with Tesla as the second-largest holding. If you're looking for more emerging market exposure, ICLN could be the choice for you.
Gender Diversity
: Try SHE, which focuses on major US companies that excel in gender diversity, with a 0.20% expense ratio. Its top holdings include Pfizer, PepsiCo, Amgen, and 3M.
Ultimately, the investment firm managing a fund chooses the companies it tracks, so you rely on their judgment. It’s a good idea to research the fund’s holdings (the companies it tracks) on your own, using stock tools like Google Finance. Also, don’t forget to check the fund’s expense ratio, which is the fee associated with it.
For a deeper dive into socially responsible investing, be sure to read Business Insider’s full guide available at the link below.
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