Ethical investing has become a popular way for investors to manage risk and align their investments with their values. If you’re an ethically-minded investor looking to manage your portfolio responsibly, you might wonder how you can apply ethical principles to your ETFs.
Implementing an ethical ETF strategy is a great way to diversify your portfolio and give your investments greater meaning. These funds offer investors the opportunity to screen out stocks that fall outside of their moral code while also helping them reinvest in companies that meet specific criteria regarding corporate governance, employee rights, and environmental impact.
If you’re interested in learning more about the ins and outs of ethical investing through ETFs, keep reading our tell-all guide on ETFs for ethical investors!
What Are ETFs for Ethical Investors?
Ethical ETF investing is when you use an ETF screener to find funds that meet your ethical values. Many people use ethical screening when putting their investment portfolios together. It’s a way to make your investments more meaningful by helping you select companies that meet specific criteria for corporate governance, employee rights, and environmental impact.
When you use an ethical ETF screener to find funds that meet your ethical values, you can ensure that your investments positively impact the world and aren’t harmful to society.
How to Conduct an Ethical ETF Screening Process
When conducting an ethical ETF screening process, the first thing you should do is determine your personal values. This will help you decide which screening criteria to use.
A few essential things to remember when conducting an ethical ETF screening process. They include:
- Make sure you’re comfortable with the screening criteria you choose. You don’t have to pick all of them, but you should feel comfortable with the values you select.
- Keep your timeframe in mind. If you’re only investing for the short-term, you may not have time to see a company meet your expectations.
- Do your research. The companies you find through your screening process should be easy to understand. This will help you stay informed about your investments and make better decisions with your money.
- Review your screening results regularly. If you find companies that don’t meet your screening criteria, remove them from your portfolio.
Factors To Help You Select An Ethically-Based ETF
If you’re wondering how to select an ethically-based ETF to fit into your portfolio, there are a few things that you’ll want to consider.
Make Sure That It’s a Reputable Fund
You don’t want to invest in a fund that doesn’t meet ethical standards. You should be able to find reliable information about your chosen fund by reading through its prospectus and annual report.
You’ll also want to check out the fund’s expense ratio. You don’t want to invest in a fund that charges too much in fees.
Find Out How the Fund Is Screened
Every ethical ETF is different. Make sure you understand how your chosen fund screens stocks to ensure that it fits your values. Remember to take notice of the fund’s performance during the screening. After all, you don’t want to invest in a fund that isn’t meeting its goals.
Research the Fund’s Sector Breakdown
If you have a specific investment goal, you’ll want to ensure that your fund meets that goal.
The Bottom Line
If you’re interested in ethical ETF investing, it’s essential to understand how to select an ethically-based ETF and ensure that it meets your investment goals.
Use ethical ETFs to screen out stocks that fall outside your moral code or reinvest in companies that meet specific criteria, such as corporate governance, employee rights, and environmental impact.
This way, you can ensure that your investments positively impact the world and aren’t harmful to society.