A Deeper Dive Into ESG ETF Portfolios

August 31, 2017

The bond exposure is pretty good though, with some caveats: the MSCI methodology gets thin on the ground when it comes to covering debt issuers. Of the bonds in the Schwab US Aggregate Bond ETF (SCHZ), only 68% are actually tracked and measured back to the issuer. Still, SCHZ is in the 88th percentile for overall “ESG-ness” among peer funds. (I’ve removed the commodity allocations from the averages, as MSCI doesn’t cover, say, wheat, from an ESG perspective.)

The last two columns here represent the percentage of the funds in “do good” stocks that are working toward things like clean energy and affordable housing; and the “sin” stocks, like companies that make land mines and booze. The numbers here are pretty representative of the broad markets, which is unsurprising.

Robo Conscience

With that backdrop, let’s see how the new Betterment portfolio looks—compared to both Matt’s dumb-and-cheap portfolio, and the basic Betterment portfolio it’s competing against:

 

Betterment Vanilla

Exposure Allocation Ticker Name Expense
Ratio %
ESG
Score
SIS % SRI
Exclusion
%
MSCI ESG Score
U.S. Total Market 12.90% VTI Vanguard Total Stock Market ETF 4 4.9053 6.26 10.64 5.18
U.S. Large Cap Value 12.90% VTV Vanguard Value ETF 6 5.234 4.70 18.18 5.38
U.S. Mid Cap Value 4.10% VOE Vanguard Mid-Cap Value ETF 7 4.6921 3.30 9.98 5.05
U.S. Small Cap Value 3.60% VBR Vanguard Small-Cap Value ETF 7 3.9027 2.99 5.59 3.76
Developed Markets 30.10% VEA Vanguard FTSE Developed Markets ETF 7 6.2129 5.83 10.40 6.46
Emerging Markets 6.30% VWO Vanguard FTSE Emerging Markets ETF 14 4.352 2.69 3.07 3.39
U.S. Corp Bond 1.70% LQD iShares iBoxx $ Investment Grade Corporate Bond ETF 15 4.7564 5.49 11.81 4.80
International Bonds 6.90% BNDX Vanguard Total International Bond ETF 12 6.1994 0.57 1.65 6.23
Emerging Market Bonds 4.20% EMB iShares JP Morgan USD Emerging Markets Bond ETF 40 4.0196 0 0.77 2.94
Municipal Bonds 17.20% MUB iShares National Muni Bond ETF 25        
        11.89 5.40 4.73 9.67  

 

Betterment SRI

Exposure Allocation Ticker Name Expense
Ratio %
ESG
Score
SIS % SRI
Exclusion
%
MSCI ESG Score
U.S. Large Cap 23.10% DSI iShares MSCI KLD 400 Social ETF 50 6.3856 12.08 0.35 7.50
U.S. Mid Cap Growth 1.00% VOT Vanguard Mid-Cap Growth ETF 7 4.6352 11.58 1.84 4.70
U.S. Mid Cap Value 5.30% VOE Vanguard Mid-Cap Value ETF 7 4.6921 3.30 9.98 5.05
U.S. Small Cap Growth 0.30% VBK Vanguard Small-Cap Growth ETF 7 3.9554 6.31 2.13 3.44
U.S. Small Cap Value 4.00% VBR Vanguard Small-Cap Value ETF 7 3.9027 2.99 5.59 3.76
Developed Markets 30.10% VEA Vanguard FTSE Developed Markets ETF 7 6.2129 5.83 10.4 6.46
Emerging Markets 6.30% VWO Vanguard FTSE Emerging Markets ETF 14 4.352 2.69 3.07 3.39
U.S. Corp Bond 1.70% LQD iShares iBoxx $ Investment Grade Corporate Bond ETF 15 4.7564 5.49 11.81 4.80
International Bonds 6.90% BNDX Vanguard Total International Bond ETF 12 6.1994 0.57 1.65 6.23
Emerging Market Bonds 4.20% EMB iShares JP Morgan USD Emerging Markets Bond ETF 40 4.0196 0 0.77 2.94
Municipal Bonds 17.20% MUB iShares National Muni Bond ETF 25       N/A
        22.32 5.74 6.70 5.46  

 

 

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