cross-posted from: https://linux.community/post/2819981

SRI ETF = social responsible index exchange trade fund

I’m a total newbie looking for one world ETF for a 30 year investment to keep it simple and to reduce risk.

ETFs I’m considering are

MSCI World SRI Index (USD) https://www.msci.com/documents/10199/641712d5-6435-4b2d-9abb-84a53f6c00e4

MSCI World Climate Change ESG Select Index (EUR) https://www.msci.com/documents/10199/84e37acb-a91e-8ff3-a909-6f8c7c6306dd

most people I asked know about the SRI but not about the climate change one. climate change’s annual performance is way higher than SRI’s. Very unsure about how to proceed.

Just to be sure, annual performance is way more important than the cumulative index performance - net returns, right? Because here climate change is better than SRI.

If I’m US based, is it better to invest in a USD denominated ETF or does it simply don’t matter if I invest in a EUR denominated one (like climate change)?

How does trump play into all of this?

  • tburkhol@lemmy.world
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    11 hours ago

    Don’t even try to pick based on performance. Whatever they did in the last year, or 5, or 10 is mostly irrelevant to what they do in the next 30. You’re betting on the economy, not on a stock picker.

    Beyond that, it kind of depends on why you want an ‘SRI’ fund. If you just want someone to tell you your investments don’t make you a bad person, then pick a fund from a large brokerage with low maintenance fees, ideally in the range of 0.1%/year. If you want an SRI because you think the market is going to reward ethical companies or punish unethical companies, or because you’'re willing to sacrifice long-term performance for not actively exploiting externalities, then you need to dig into the funds a little deeper and find out what they mean by ‘social responsibility.’ It’s a hot marketing phrase right now, with no regulatory meaning, so you can be sure that there are products being called ‘socially responsible’ with little or no difference from products not so labeled.

    If you actually have a specific ethical agenda, then you need to be prepared to do a lot of work. You’ll need to understand how the fund defines SRI, find out what benchmarks they use to greenlight companies, and figure out whether those benchmarks can be greenwashed. Can Exxon donate a few million dollars to a sketchy ‘reforestation charity’ and claim to be carbon-neutral? I imagine this research is out there, but the people interested in Wall Street tend to be a different set than those interested in climate, labor rights, or political freedom.

  • sugar_in_your_tea@sh.itjust.works
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    10 hours ago

    After some light research, SUWS is what I’d go for to trade the first index. I didn’t see a suitable fund for that second for US investors.

    annual performance is way more important than the cumulative index performance - net returns, right?

    Don’t buy funds based purely on past returns, but a fund because it fills some part of your overall investing strategy. I pick a set of indices as my target portfolio, and approximate it with funds that have low tracking error (returns largely match the index) and low net fees. If a fund doesn’t track it’s index well and outperforms in the recent past, there’s no guarantee it’ll continue and it could underperform going forward. Both indices are pretty new (10-15 years), so I don’t think there’s enough data to speculate about a 30-year time horizon.

    I largely ignore returns when evaluating funds/indices, I care far more about fund composition. The top 10 holdings are very different between the two indices you linked. For example, one has Nvidia at 18% of the index and doesn’t have Microsoft or Amazon, while the other has Nvidia at ~7.5% and does have Microsoft and Amazon. So it makes complete sense that they would have very different returns over the recent past since those three companies make up a large chunk of each index and their benchmark.

    How does trump play into all of this?

    Idk? He’d certainly have an impact on performance w/ tariffs, but I don’t know which fund would have larger impacts. But you said you’re looking at a 30 year investing horizon, so I dont think Trump is relevant here since he’ll be out of office one way or another within that time horizon.

    My biggest concern would be transaction fees buying the fund if you pick a EUR-denominated one, so ask your broker if you have a any questions about that.

  • Otherbarry@lemmy.frozeninferno.xyz
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    14 hours ago

    If I’m US based

    Assuming you are then you should be looking for a USD ETF. The ETF itself doesn’t have to be investing in U.S. based companies (and in fact there are many, many USD ETFs focused outside the US).

    ETFs I’m considering are MSCI World SRI Index (USD) https://www.msci.com/documents/10199/641712d5-6435-4b2d-9abb-84a53f6c00e4 MSCI World Climate Change ESG Select Index (EUR) https://www.msci.com/documents/10199/84e37acb-a91e-8ff3-a909-6f8c7c6306dd

    Keep in mind those are indexes, not ETFs. You are going to want to look for an ETF that is following the particular index(s) you are looking at. So for example the second index you mentioned does list one ETF that is following that index, see the main page for that index and click “Index-Linked ETPs”

    https://www.msci.com/indexes/index/728912

    The only ETF listed there is a EUR ETF, there may be no USD ETFs following that index. Your next step is trying to find a brokerage in the U.S. that allows you to invest in that ETF… Thing is, those brokerages will sell you access to invest in USD ETFs, not EUR. A ETF for EUR markets is primarily going to be offered in countries that trade in EUR.

    Main point: Tons of indexes exist for different purposes but that doesn’t mean that ETFs exist that follow those indexes, let alone USD ETFs. For your purposes sure you can look at any indexes you are interested in just remember you’d still need to find a corresponding USD ETF that is following the index.

    SRI ETF = social responsible index exchange trade fund

    You may already know this, just keep in mind these indexes that measure “SRI”, or climate change, or concepts like that will measure this stuff in different ways that people don’t always agree with. For example the MSCI World SRI Index you linked has TESLA as one of its top investments, many would argue that Tesla/Elon Musk are not compatible with the idea of SRI.