At Clover, our mission is to make smart investing more personalised and more affordable. That means we’re constantly looking at ways to make Clover more customised and relevant to the things you care about, while staying true to evidence-based investing.
Since launching Clover in 2016, one of the most requested features (and a feature we’re proud to work on!) is an ethical investment option.
Today, we’re pleased to announce that you can now include Socially Responsible Investments in your Clover portfolio. You can be proud that your investments will put future you — and the world — in a better place.
Ok, sounds pretty good. But what *exactly* is Socially Responsible Investing?
Socially Responsible Investing is a method of investing that takes into account the impact of a company on the world. Companies are evaluated on their triple bottom line, which accounts for not just the potential financial return, but also their environmental and social impact. It’s a way for investors to put their personal values into action, and help shape society.
The three main factors companies are screened on are Environmental, Social and Governance (or ESG for short) considerations.
Which funds do Clover use?
For Australian shares, we’ve chosen the Russell Australian Responsible Investment ETF which screens out companies heavily involved in alcohol, tobacco, gambling, pornography, controversial weapons (like cluster bombs), and high polluting fossil fuels. It also gives an increased weighting to companies that display positive environmental, social and governance practices (such as diversity and management). The entity managing this ETF, Russell Investments, has been a signatory to the United Nations’ Principles for Responsible Investment (UNPRI) since 2009.
For International shares, we’ve chosen the UBS IQ MSCI World Ethical ETF, which screens out companies with significant involvement in tobacco, production of cluster bombs, landmines, chemical and biological weapons and depleted uranium weapons.
How do Socially Responsible Investments perform?
A common concern is that socially responsible investing means having to sacrifice investment returns. There is a robust, and growing, body of evidence that this is simply not the case.
An analysis of 2,200 individual studies of ESG and corporate financial performance found that “the large majority of studies reports positive findings”. This is likely the largest empirical study on the matter, and presents a solid business case for ESG biased investing.
Another study, this one by Morgan Stanley found that “investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments. This is on both an absolute and a risk-adjusted basis, across asset classes and over time.”
Does Clover charge more for Socially Responsible portfolios?
No, we charge the same low fee regardless of whether you choose to add the Socially Responsible Investment option or not.
However, the inbuilt fees charged by the firms that manage the ETFs for Socially Responsible Investment are slightly higher. This is because there is significantly more work involved in managing the screening process, e.g.for example investigating and evaluating the companies. Core Clover portfolios have an average ETF fee ranging between 0.19% to 0.25% per year, whereas our Socially Responsible Investment option portfolios have an average ETF fee ranging between 0.23% to 0.40% per year.
Sounds good! How do I sign up?
If you’re new to Clover, simply create an account and during sign up you’ll have the option to include Socially Responsible Investments in your portfolio. It’s totally your choice.
If you’re already a client and want to add a Socially Responsible Investments to your portfolio, drop an email to us at firstname.lastname@example.org.
Clover is an automated investment service that helps you save and invest better.
Where can I read more about the Socially Responsible Investment ETF construction, methodology and holdings?
What percent of my portfolio will be composed of the Socially Responsible Investments?
Will Clover’s Socially Responsible Investment options change over time?
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