Investors today tend to overlook mutual funds in favor of the more liquid and more tax efficient exchange traded funds when crafting specialty portfolios. But as U.S. News points out, there are established mutual funds with good track records that can provide investors with solid long-term performance.
The publication has picked out seven options for investors who want to incorporate sustainability in their portfolios. These green mutual funds are all well-established with more than $1 billion in assets, and they all offer straightforward strategies that will put your portfolio to work in the fight against climate change.
Here is the U.S. News capsule on each:
Parnassus Core Equity Fund
- Assets under management: $30.1 billion
- Expense ratio: 0.82%, or $82 annually on every $10,000 invested
- Minimum investment: $2,000
The Parnassus Core Equity Fund is the leader among green mutual funds when it comes to assets under management. It has a focused portfolio of about 40 stocks, led by Microsoft Corp.
MSFT
and Google parent Alphabet Inc.
GOOGL
, and is designed to be a core large-cap fund as much as a green mutual fund. That said, investment manager Parnassus has made a name for itself by linking traditional fundamental analysis with an overlay of environmental, social and governance factors to ensure all of its funds take sustainability into account.
Calvert Equity Fund
- Assets under management: $6.8 billion
- Expense ratio: 0.91%
- Minimum investment: $1,000
Similar to the prior Parnassus fund, Calvert is an investment adviser that prioritizes ESG in its approach, with a 40-year track record of “responsible” investing that takes into account sustainability and environmental factors, among other criteria. The fund holds about 45 companies, led by familiar Big Tech names as well as less obvious plays like health care firm Danaher Corp.
DHR
The fund is composed of large-cap domestic stocks that rank highly for their internal programs such as purchasing carbon offsets or building LEED-certified headquarters.
Putnam Sustainable Leaders Fund
- Assets under management: $6.6 billion
- Expense ratio: 0.92%
- Minimum investment: None
This Putnam offering is also a focused fund with less than 60 total stocks led by familiar favorites like Apple Inc.
AAPL
and Amazon.com Inc.
AMZN
, as it “invests in companies that have demonstrated leadership in key sustainability issues that are financially material to their business context,” according to official documentation from its manager Franklin Templeton. One notable downside that investors should consider before buying in: There are some high front-end costs associated with PNOPX, which has a maximum initial charge of 5.75%.
Amana Growth Fund
- Assets under management: $2.8 billion
- Expense ratio: 0.91%
- Minimum investment: $100
This Amana Growth fund from Saturna Capital is unique in that it bills itself as “halal” – or fitting the religious requirements of Islam. That means you won’t find businesses that focus on alcohol, pornography or gambling. And you won’t find a penny in finance because strict Islamic law prohibits demanding interest on loans. Though there are only 34 total holdings, the fund is well established with several billion dollars in assets. It also has a growth-oriented approach, which may appeal to some investors.
Fidelity U.S. Sustainability Index Fund
- Assets under management: $4.2 billion
- Expense ratio: 0.11%
- Minimum investment: None
A cost-effective option, from Fidelity is a sustainability-focused mutual fund that charges just a fraction of what the other funds on this list charge. It is also the most wide-ranging of the green mutual funds so far, with 285 total stocks in its portfolio. That doesn’t mean it’s all that more diversified, however, as it is weighted by size – so megacap stocks like Microsoft and Nvidia Corp.
NVDA
dominate the portfolio; in fact, 37% of all assets are in its top 10 positions.
Calvert Small-Cap Fund
- Assets under management: $2.9 billion
- Expense ratio: 1.19%
- Minimum investment: $1,000
This fund is definitely the most expensive on this list from an annual fee perspective. That’s in part because this is a boutique offering with an active approach. Calvert prides itself on its sustainability approach to all its funds, as mentioned previously, but this is a harder-to-manage vehicle as it holds a select list of about 70 companies with an average market capitalization of less than $5 billion. Top stocks include real estate firm Essential Properties Realty Trust Inc.
EPRT
and medical device firm AptarGroup Inc.
ATR
Parnassus Mid Cap Fund
- Assets under management: $3 billion
- Expense ratio: 0.96%
- Minimum investment: $2,000
Parnassus , with a focus on midsized corporations and an average market value of about $30 billion, offers a way to invest sustainably in established firms but not necessarily duplicate positions you might own in a traditional large-cap fund. Top holdings include derivatives exchange operator Cboe Global Markets Inc. and financial software and technology firm Fidelity National Information Services Inc.
FIS
Read more: 6 impact investing firms and funds that are top picks from U.S. News