Yes, you might be able to earn more by investing in whatever is the best investment overall–but have you ever stopped to consider what kind of impact that company might be having on the environment?
For instance, big tobacco is a controversial one. Yes, you could very well get rich investing in tobacco companies, but how does that make you feel? For some, it’s no issue. For others, it is.
That’s why we’re outlining the best robo advisors that have a social component or focus their business on social impacts. This list will give you some ideas on how to put your money toward some type of greater cause.
Ally Invest is currently at the top of our list for socially-responsible investing. With their new Managed Portfolios, you can get a robo-advisor for free – that’s right – no advisory fee with Ally Invest Managed Portfolios.
And all you need is $100 to start investing–which is a heck of a deal. You’ll also have access to email, chat, or phone support 24 hours a day, 7 days a week.
While the money you invest doesn’t have advisory fees, the money that isn’t invested earns 1.60% APY in an interest-earning account, so your money doesn’t ever sit there being unused.
All four core portfolios are human-assembled and managed and monitored daily to determine if rebalancing needs to occur. But most importantly for this article is the socially responsible investing (SRI) fund.
Ally Invest has three categories for its SRI fund:
- ESG Funds – Put your money to good use with ETFs that consider important environmental, social and governance (ESG) attributes.
- Thematic Funds – If you have a particular passion for the environment or a special place in your heart for diversity or if you prefer to invest in companies that are governed well, thematic funds allow you to focus on the issues that matter the most to you.
- Impact Funds – Created to make a mark on the world, these funds aim for maximum change through maximum profits and are a great choice for investors who want to make their mark economically, socially and environmentally.
Here are the funds you’ll find in each category:
- ESGU – iShares ESG MSCI USA ETF
- ESGD – iShares ESG MSCI EAGE ETF
- SUSB – iShares ESG 1-5 Year USD Corporate Bond ETF
- SUSA – iShares MSCI USA ESG Select ETF
- ESML – iShares ESG MSCI USA Small-Cap ETF
- ESGE – iShares ESG MSCI EM ETF
- SUSC – iShares ESG USD Corporate Bond ETF
- DSI – iShares MSCI KLD 400 Social ETF
- EAGG – iShares ESG U.S. Aggregate Bond ETF
- CRBN – iShares MSCI ACWI Low Carbon Target ETF
- ICLN – iShares Global Clean Energy ETF
- SDG—iShares MSCI Global Impact ETF
- BGRN—iShares Global Green Bond ETF
We’ve written wonderful things about Ally Invest in our full review, and continue to be impressed with their Managed Portfolios investment solution.
Betterment is known for being one of the best overall robo advisors on the market. But they also have a Socially Responsible Investing (SRI) portfolio.
What’s nice about Betterment’s SRI portfolio is that they considered performance heavily when choosing funds. Many times what you see is a loss in performance in exchange for a “greener” set of investments. But Betterment did a hefty amount of research to replace funds from their core strategy portfolio to be more Socially Responsible, without deviating from their overall philosophy:
“As we developed Betterment SRI, we analyzed all low-cost SRI ETFs available, searching for products that could replace components of our core strategy without disrupting the diversification or cost of the overall portfolio.”
The SRI portfolio mixes Large Cap US stocks with Emerging Market stocks. They chose not to utilize other asset classes such as mid or small cap because there aren’t any SRI-friendly funds in those categories yet.
If you’re interested in reading about how they developed their SRI portfolio, Betterment actually put together an entire whitepaper on it. Otherwise, head over to Betterment to sign up for an account and simply choose the SRI portfolio as your investment choice and you’ll be good to go.
Read our full Betterment Review.
Wealthsimple is quickly becoming one of the best robo advisors overall, and they’re at the top of our list for being Earth Day-friendly, too. With Wealthsimple, you can choose a Socially Responsible Investing portfolio and invest in line with your values. According to Wealthsimple, they make it so you can “invest in socially responsible initiatives across the globe, so you can be well-diversified while helping build the world you want.”
When you choose a SRI portfolio, your money is spread across the entire stock market in low-cost ETFs. These ETFs are screened meticulously by Wealthsimple based on their:
- Environmental impact
- Social impact
- Overall performance
The funds that are currently part of this portfolio focus on issues such as:
- Low carbon
- Gender diversity
- Local initiatives
- Social responsibility
- Affordable housing
Wealthsimple is a fiduciary, meaning they are obligated to give you financial advice that’s in your best interest – not theirs. Yes, they’re a robo advisor, but they also have highly-knowledgable experts available to help you if and when you need it.
Wealthsimple is a bit more on the expensive side, charging 0.50% annually for up to $100,000 in deposits. Over that, you drop to 0.40% and get some more perks. Wealthsimple is one of the best overall robos, so if you’re looking to start with something that has an impact on the environment, you can’t really go wrong with Wealthsimple.
Read our full Wealthsimple Review
Motif was founded by Hardeep Walia with the focus of giving “everyday investors access to cutting edge investment products.” Motif uses and focuses on thematic investing, which focuses on long-term trends that are likely to drive disproportionate earnings growth in the future. The company uses Artificial Intelligence and advanced algorithms to pick and allocate stocks for you.
Motif offers a few different thematic portfolios–one of them being the Impact Portfolio. The Impact Portfolio has stocks in five different asset classes that focus on three major areas:
- Sustainable Planet – companies that reduce their carbon footprint
- Fair Labor – companies that promote fair labor, job security, and safe working conditions
- Good Corporate Governance – companies with ethical track records
Motif’s pricing is great, too. With a $1,000 minimum investment, you’ll pay a flat 0.25% annual fee on your assets.
Their platform is slick and innovative, making it easy to manage your assets on your desktop or mobile phone. You can automate this process with dollar-cost-averaging and rebalancing as well as “trade stocks more intuitively by purchasing in either dollars or shares using our patented technology.”
You can open an individual or joint taxable account, a trust, or a Traditional, Roth, or Rollover IRA. You’ll also rest assured knowing that “every Motif account is insured up to $500,000, including a maximum of $250,000 for cash claims and each Motif customer is protected up to $1.9 million through excess SIPC insurance provided by Lloyd’s of London.”
Read our full Motif Investing Review.
Sustainfolio is part of an independent investment advisory firm called Sustainvest Asset Management, which was founded in 2013. The firm is 100% focused on sustainable investing. Whereas other robo advisors might see sustainable investing as a niche part of their business model, Sustainfolio has elected to make it their entire business model – it’s all they do.
Sustainfolio is a newer player to the robo advisor game. Their sole focus is sustainable investing, meaning they focus on stocks that are simple and ethical. Every portfolio Sustainfolio invests in is screened for ESG criteria and will be modified by your own personal risk tolerance.
Sustainfolio requires a $5,000 minimum investment, and their fees are 0.50% per year. Currently, you can open up any of the following account types:
- IRA & 401(k) Rollover
- 403(b) Rollover
Another great feature about Sustainfolio is that they donate 1% of their annual revenues to environmentally focused non-profits. If you’re looking to support a smaller, startup robo advisor and don’t mind paying a little more to get a laser-focused sustainable investment portfolio, you might want to check out Sustainfolio.
Related: Best Robo Advisors – Find out which one matches your investment needs.
Polaris Portfolios was co-founded by Evan Kulak, Michael McDermott, and Grant White to “provide a better way for individuals and their families to receive fiduciary-driven investment advice.” Polaris focuses on wealth management overall, but they do have a special ESG Investing portfolio that features companies that have positive environmental, social, and corporate governance characteristics.
Polaris Portfolios focuses on six key investment principles that are embedded in the way they work:
- Dynamic Diversification – your portfolio is spread across six core asset classes
- Risk Management – Polaris uses techniques to minimize the negative impacts of down markets
- Low Fees – there are no trade fees, transaction fees, load fees, or rebalancing fees
- Smart Rebalancing – their algorithms will buy low and sell high to maintain risk-adjusted returns on your behalf
- Tax Optimization – the software used by Polaris will minimize your tax obligations
- Fiduciary Standard – the company abides strictly by the Fiduciary Standard
Polaris Portfolios charges a bit more than some of the others on this list, coming in at a flat 0.75% annual fee. You can open a general taxable account, but also a variety of IRAs. The minimum investment amount is $500, so if you want to get started with a low cost of entry, Polaris might be a fit.
EarthFolio was actually the first robo advisor dedicated entirely to sustainable investing, and features “world-class funds, personal asset allocation, and ongoing portfolio monitoring, all at a fraction of the typical investment and cost.” Their process is simple:
- They’ll ask about your goals – this includes risk tolerance, age, and what you’re investing for
- They provide you a recommended portfolio – the portfolio will allow you to make the best decision possible, estimating how your money will perform over the next 15 years
- Open your account – in just minutes you can open an account and get started
EarthFolio allows you to open a number of different account types:
- IRA Rollover
- 401(k) Rollover & 403(b) Rollover
The downside to this sustainable investing-focused robo advisor is the barrier to entry. You currently need $25,000 to open an EarthFolio account. Once you’re in, pricing is reasonable at 0.50% per year.
This is another smaller robo advisor that focuses on a very specific niche. If you want to support a smaller firm and what they stand for, EarthFolio is a great option.
OpenInvest was founded in 2015 by Conor Murray and Phil Wei. Murray and Wei both had strong investment backgrounds, working for Bridgewater Associates, and later teamed up with Josh Levin – who at the time was a finance expert from the World Wildlife Fund. They got financial backing and have since launched their robo advisor platform that focuses exclusively on socially responsible investing.
They have a number of causes they seek to invest in, including:
- Investing in healthy hearts – organizations focused on reducing heart disease
- Fighting dark money – organizations that fight back on lobbyists and politicians who pump money toward others to fund their own agendas
- Fighting CO2 pollution – organizations that fight against CO2 and other types of pollution
- Defunding DAPL – defunding one of the largest oil pipelines that threatens indigenous land–read more here
- Fighting deforestation – fight against companies that drive deforestation
- Fighting fossil fuels – organizations fighting against the production and use of fossil fuels
- Divesting gun violence – organizations that fight gun violence
- Pro-LGBTQ – companies that are and drive support for LGBTQ
- Divesting from the Prison Industrial Complex – PIC exploits people who are incarcerated–read more here
- Support refugees – organizations supporting refugees
- Ethical supply chains – fight alongside companies that combat against things like human trafficking and forced labor
- Divesting from big tobacco – invest in organizations that seek to divest from big tobacco companies
- Stand up against Trump – support companies who focus on standing up against Donald Trump
- Women in the workplace – companies that focus on promoting women in the workplace
Whew, what a list.
If you’re someone who agrees with these principles, I can’t say there’s another robo advisor out there that focuses this heavily on these causes.
OpenInvest doesn’t have terrible pricing, either. It’s 0.50% per year, and you can open an account with as little as $100.
As you can see, there are quite a few robo advisors that have portfolios that focus on socially responsible investing or focus their business entirely on causes that support SRI. If you’re someone who wants to support an impact on the world, you can’t go wrong with any of these options.