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Three steps to a socially conscious portfolio

Once you decide on your approach, you have another option: active management, where fund managers manually select the content of a portfolio company by company, or passive management, where they can license an index. Active funds tend to have higher rates, particularly for international funds where more expensive research may be necessary. And high rates can affect returns.

Now for some grain.

First, the funds you are considering. What exactly in them? You can request the complete list of companies, although the data sheet of a fund can include only the 10 main participations. It can be an enlightening exercise.

Next, consider the fund managers themselves. How long have you been managing this fund or a similar one, particularly if you select stocks and not just rent an index to use? Investment advisors and people who select funds for 401 (k) plans generally want to see at least a three-year history and tens of millions of dollars under management.

Both are barriers to entry. One sets aside fund managers who use new strategies, such as animal welfare funds. And if few people will give money to a new fund without a track record, wealthy fund managers have a built-in advantage: they can raise money from the family.

"As a queer-colored woman, she came from extreme rural poverty," said Rachel Robasciotti, whose San Francisco-based investment advisory firm uses some of the services of E.S.G. more rigorous criterion I've seen "I'm well connected now, but I don't have that asset treasure."

Another question that does not arise so much but should: how do fund companies vote on shareholder resolutions? Usually, this is not easy to understand, and some fund companies are better at sharing than others.

On Thursday, Morningstar launched a report in five years of E.S.G. Voting records of 50 large fund companies, although excluding government resolutions and shareholder rights initiatives that did not specifically include social or environmental factors. He found that in 2019, Allianz Global Investors, Blackstone, Eaton Vance and PIMCO were more likely to vote in favor of resolutions related to E.S.G. The least likely list included five of the 10 largest fund companies: American Funds, Dimensional Funds, T. Rowe Price, Vanguard and BlackRock, who shouted from the rooftops last month that they really, really intend to worry more about this kind of things. this point forward


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