The Top 7 Socially Responsible ETFs

March 01, 2017

SHE tracks U.S. firms with a high proportion of women in leadership positions. SHE carries an expense ratio of 0.20%.

SHE’s benchmark evaluates the 1,000 largest U.S. companies for the ratio of women to men on their boards of directors and in executive positions (e.g., vice president or managing director and above). The top 10% in each sector make it into the index, so long as each firm has at least one woman on its board, or as CEO or chairperson.

Don’t expect a portfolio run by exclusively female CEOs and executive teams—the corporate world is far from egalitarian—but boardroom gender ratios among SHE’s 183 stocks are better than what you’d find elsewhere. Still, as with other ETFs on this list, SHE doesn’t deviate too far from the broader U.S. market.

Notably, SHE’s index rebalances annually, so it might take several months for efforts to diversify boardrooms to be reflected in the fund’s lineup.

One of the oldest renewable energy funds around, TAN tracks solar-power companies listed in developed markets.

TAN represents every facet of solar power, from photovoltaic to solar thermal, from raw materials to manufacturing to installation. Stocks are weighted in the index by the relative importance of solar power in their business: Companies that derive between one- and two-thirds of their revenue from solar power activities are weighted by half; anything less is eliminated entirely.

TAN’s portfolio includes 19 holdings and skews toward small-caps. Half its holdings are in the U.S., while another 38% are in Hong Kong and China.

TAN has far more assets and volume than its nearest competitor, the VanEck Vectors Solar Energy ETF (KWT). But KWT has a larger portfolio (29 names), and requires its constituents to derive half or more of their revenues from solar power.

With a 0.71% expense ratio, TAN is the most expensive ETF on our list.

Like CRBN, LOWC tracks the MSCI ACWI Low Carbon Target Index. LOWC beat CRBN to market by a few weeks, but CRBN has more than twice the assets and almost 10 times LOWC’s average daily volume.

Portfoliowise, LOWC is essentially the same fund as CRBN, just with some extra names included (1,509, compared with CRBN’s 1,164). LOWC is managed by State Street, whereas CRBN is managed by BlackRock.

SPYX is exactly what it says on the tin: The fund’s benchmark excises companies with fossil fuel reserves from the S&P 500 Index. Fossil fuel reserves are defined as recoverable sources of thermal coal, crude oil and natural gas.

SPYX looks like an awful lot like the SPDR S&P 500 ETF (SPY), just with a few sector tweaks. Whereas energy makes up about 8% of SPY’s portfolio, it only comprises 2% of SPYX’s. Still, SPYX’s performance is almost identical to SPY’s, just with a higher fee—0.20% versus SPY’s 0.09%.

 

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