What to do you need to know in order to build and manage a sustainable portfolio of funds? That was the topic of our recent webinar on sustainable investing.

In the webinar, FundX President Janet Brown talked with Morningstar’s Tanya Svidler, director of ESG solutions, and Avani Rau, portfolio manager of sustainable strategies at FundX.

Here are three of Tanya and Avani’s tips that can make it easier for you to build a sustainably focused portfolio.

Tip #1 – Start with a solid investment strategy.

These days, investors have more information on sustainability measures than ever before, but you’ll want to incorporate this data into an existing strategy.

Morningstar’s ratings are “designed to be a complement” to your investment process, Morningstar’s Tanya Svidler noted.

That’s what we’ve done at FundX: “We already have a system in place for fund selection,” Avani Rau said, and we’ve integrated Morningstar’s sustainability scores into this process.

“Sustainability ratings are portfolio based, not performance based,” Avani explained. In our strategy, “we first screen funds by performance, and then we look at sustainability.”

Tip #2 – Sustainability ratings can enhance your process; they don’t replace it.

New sustainability fund ratings can help investors identify funds that invest in companies with strong environmental, social and governance (ESG) practices. Ratings can also help you find funds that invest in a sustainable way even if they don’t label themselves as such.

However, sustainability ratings are “just one of the factors investors need to look at,” Morningstar’s Tanya Svidler said. For instance, some investors want to screen out certain companies or engage with companies to help them improve.

FundX’s Avani Rau agreed: “Data is important, but it isn’t enough,” she said. Continue reading “Three Tips for Building a Sustainable Fund Portfolio” »

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Current events and the political climate have inspired many people to invest in a way that can make a difference.

According to the Wall Street Journal, after the U.S. withdrew from the Paris climate accord, investors moved money into sustainable funds.

Morningstar reported that millions of dollars flowed into environmental, social and governance (ESG) funds after the Parkland school shooting. (Many ESG funds don’t invest in gun companies.)

Many people want to use their investments to support the issues that matter to them, but they aren’t sure how to do it.

Fortunately, the same rules of investing still apply: Stay diversified. Pay attention to risk and return. Invest in noload funds (you don’t have to pay hefty loads or sales charges to invest in a sustainable way).

Here’s how you can put these practical guidelines to work for you.

If you’re new to sustainable investing, these four tips can help you get started and avoid common mistakes:


1. Start with sustainable funds

Sustainable funds or environmental, social and governance (ESG) funds are a great place to start. By investing in sustainable funds, you’ll be diversified, and you also won’t have to try to evaluate a company’s environmental, social or governance (ESG) records on your own. Your fund likely has a whole team of people who are doing this important work.

Where to find sustainable funds?

One place to start is the U.S. Forum for Sustainable Investing (USSIF)’s list. However, some of the funds on the USSIF list are load funds, and others have very high minimum investments ($1 million) so you’ll want to make sure to focus on noload funds that you can invest in.

If you click on the ‘account minimums’ tab, it’s easy to see which funds are available for as little as $1,000. (Full disclosure: the sustainable mutual fund FundX manages is included on the USSIF list).

In NoLoad FundX, we mark sustainable funds with ‘SRI’ in the underlying portfolio column.

2. Focus on diversified funds, not riskier concentrated funds Continue reading “Four Practical Tips to Help You Get Started with Sustainable Investing” »

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