A growing number of investors are placing billions of dollars into socially responsible impact investing funds, which are also known as Environmental, Social, and Governance (ESG) funds. These portfolios select stocks based on a company's ESG practices, along with more traditional financial measures. This has spawned a new family of exchange-traded funds (ETFs) that focus on investing criteria for the social good. These relatively new ETFs allow investors to achieve diversification while owning companies that follow specific ESG criteria.
- Impact investing securities matched the performance of the broader market over the past year.
- The ETFs with the best 1-year trailing total return are PRNT, WOOD, and IPKW.
- The top holdings of these ETFs are Straumann Holding AG, West Fraser Timber Co. Ltd., and sponsored ADRs of Wipro Ltd., respectively.
There are 28 distinct impact investing ETFs that trade in the U.S. with an ESG score of 8 out of 10 or higher from ETFdb.com, excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). Impact investing securities, as measured by the S&P 500 ESG Index, have matched the performance of the broader market. Both the index and the S&P 500 have provided 1-year trailing total returns of 50.0% as of May 6, 2021. The best-performing impact investing ETF, based on performance over the past year, is the 3D Printing ETF (PRNT). We examine the best 3 impact investing ETFs below. All numbers below are as of May 12, 2021.
- Performance over 1-Year: 88.1%
- Expense Ratio: 0.66%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 508,258
- Assets Under Management: $529.1 million
- Inception Date: July 19, 2016
- Issuer: ARK
PRNT is a multi-cap fund targeting the Total 3D-Printing Index. The index is comprised of companies involved in the 3D printing industry in the U.S., non-U.S. developed markets, and Taiwan. 3D printing sales rose during the COVID-19 pandemic as it was used for fabricating face shields and other protective equipment. PRNT is one of the few passive products available from fund provider ARK. The fund has 57 holdings, with the top 10 accounting for just under 50% of invested assets. The top three holdings of PRNT are Straumann Holding AG (STMN:SWX), a Switzerland-based maker of dental implants, instruments, and related products; ExOne Co. (XONE), and 3D Systems Corp. (DDD), both of which provide 3D printing machines and similar products.
- Performance over 1-Year: 85.4%
- Expense Ratio: 0.46%
- Annual Dividend Yield: 0.81%
- 3-Month Average Daily Volume: 70,760
- Assets Under Management: $471.7 million
- Inception Date: June 24, 2008
- Issuer: BlackRock Financial Management
WOOD is a multi-cap fund targeting the S&P Global Timber & Forestry Index. The index is comprised of companies from around the world that produce forest, agricultural, paper, or packaging products. The ETF aims to provide protection against inflation because timber has a track record as a hedge against rising general prices. WOOD is concentrated across just 25 holdings, with companies from the U.S., Canada, and Sweden making up about two thirds of the portfolio. The top holdings for WOOD are West Fraser Timber Co. Ltd. (WFG:TSE), a Canada-based producer of pulp, newsprint, and wood chips; Rayonier Inc. (RYN), a timberland real estate investment trust (REIT); and Weyerhaeuser Co. (WY), a timberland company and wood product manufacturer.
- Performance over 1-Year: 75.0%
- Expense Ratio: 0.55%
- Annual Dividend Yield: 1.16%
- 3-Month Average Daily Volume: 12,800
- Assets Under Management: $133.4 million
- Inception Date: Feb. 27, 2014
- Issuer: Invesco
IPKW is a multi-cap fund that targets the Nasdaq International BuyBack Achievers Index. The index is comprised of common stocks of foreign companies that have seen a net reduction in shares outstanding of 5% or more in their latest fiscal year. The fund follows a blended strategy, investing in both value and growth stocks. IPKW has 85 holdings in its portfolio, with more than half representing companies based in Japan or Canada. The top holdings of IPKW include sponsored ADRs of Wipro Ltd. (WIT), an Indian information technology and business services provider; Nutrien Ltd. (NTR:TSE), a Canadian fertilizer company; and Akzo Nobel N.V. (AKZA:AMS), a Dutch maker of paint and performance coatings.
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