In recent years, there has been a shift towards ethical investing as more and more investors are seeking to align their values with their investment decisions. Ethical funds, also known as socially responsible or sustainable funds, allow investors to put their money into companies that prioritize environmental, social, and governance (ESG) factors alongside financial performance. This trend has only accelerated in light of growing concerns about climate change, social justice, and corporate responsibility.
For those looking to invest in ethical funds, there are a plethora of options to choose from. To help navigate this landscape, we have compiled a list of some of the best ethical funds for 2021. These funds not only prioritize ESG factors but also aim to deliver strong returns for investors.
1. **Vanguard FTSE Social Index Fund (VFTAX)**
The Vanguard FTSE Social Index Fund is a low-cost mutual fund that tracks the performance of the FTSE4Good US Select Index. This index includes companies with strong ESG practices that meet a set of criteria established by the FTSE Group. The fund has a diversified portfolio of large and mid-cap companies across various sectors and has performed well in recent years. With a low expense ratio and a commitment to sustainability, VFTAX is a great option for investors looking to align their values with their investments.
2. **Parnassus Core Equity Fund (PRBLX)**
The Parnassus Core Equity Fund is a top-performing ethical fund that focuses on companies with strong ESG practices and positive social impact. The fund is managed by Parnassus Investments, a pioneer in sustainable investing, and has a long track record of delivering competitive returns. With a concentrated portfolio of high-quality companies, PRBLX is well-positioned to weather market volatility and outperform over the long term.
3. **iShares ESG MSCI USA ETF (ESGU)**
For investors looking for a passive investing option, the iShares ESG MSCI USA ETF is a great choice. This exchange-traded fund (ETF) tracks the performance of the MSCI USA ESG Leaders Index, which includes companies with high ESG ratings relative to their industry peers. ESGU provides exposure to a diversified portfolio of US companies with strong sustainability credentials and competitive financial performance. With a low expense ratio and strong performance, this ETF is a solid option for investors seeking to invest ethically.
4. **Calvert Equity Fund (CSIEX)**
The Calvert Equity Fund is a socially responsible mutual fund that invests in companies with positive ESG profiles and sustainable business practices. The fund is managed by Calvert Research and Management, a leader in sustainable investing, and has a long history of delivering competitive returns. CSIEX has a diversified portfolio of large-cap companies across various sectors, making it a well-rounded option for investors looking to align their values with their investments.
5. **TIAA-CREF Social Choice Equity Fund (TISCX)**
The TIAA-CREF Social Choice Equity Fund is a socially responsible mutual fund that invests in companies with strong ESG profiles and positive social impact. The fund is managed by Nuveen, a subsidiary of TIAA-CREF with a focus on responsible investing. TISCX has a diversified portfolio of large and mid-cap companies across various sectors and has a solid track record of performance. With a commitment to sustainability and impact investing, this fund is a great option for investors seeking to invest ethically.
In conclusion, ethical investing is gaining momentum as investors increasingly prioritize ESG factors in their investment decisions. The best ethical funds for 2021 offer investors the opportunity to align their values with their investments while also aiming to deliver strong financial returns. Whether through mutual funds or ETFs, investors have a wide range of options to choose from when seeking to invest ethically. By investing in these top picks for ethical funds, investors can make a positive impact on society and the environment while working towards their financial goals.