Divesting my investments from Israel

[PoutineLover]

Curious whether anyone here in Canada would have resources or advice for someone who would like to divest their holdings from Israel and ideally from weapons in general, while still using index funds. Amid the calls for university divestment, I realized that I could also try to put my money where my mouth is.

Currently many of my investments are in VGRO, as a simple one stop shop, as well as other Vanguard funds depending on my timeline for the money. I do also have some in XESG which excludes many weapons and fossil fuel companies.

There are just so many companies in the BDS list that I have no idea how one would go about constructing a portfolio that excludes them without just switching to individual stocks and vetting each of them, which also seems like a suboptimal investment strategy.
Open to any suggestions or resources.

[Heckler]

Step 1:  what is the BDS List?  -me

Step 2: https://bdsmovement.net/what-is-bds

[Heckler]

What it takes are governmental sanctions.  Russia got dropped out by Vanguard as a result of sanctions.

https://www.vanguard.ca/en/advisor/insights/vanguards-response-to-the-war-in-ukraine

Pressure on politicians is more powerful than not buying hummus.

[Heckler]

VGRO is showing 0.1% allocation to Isreal.  Could be a real challenge to only buy the other 99.9%, unless you separate VGRO into it building block ETFs and ditch the developing global ETF, but then you’ll likely miss out on all of Europe, not ideal.

[GilesMM]

It is easy to drop Israeli stocks since most people probably don't own any.


https://stockanalysis.com/list/israeli-stocks-us/

They are so small as to constitute a tiny fraction of a percent of any index.   Getting 100% out of Israeli stocks would mean getting out of index funds entirely and into stocks or funds which are not Israeli (easy) but ideally also companies not doing business with Israel (difficult).  I would love to slug Israel, but this seems difficult.  You can imagine universities are struggling with it as well as they would be throwing the baby out with the bath water to drop all their index investments plus any company doing business with Israel.

[Retire-Canada]

That's going to be a PITA. I would take an alternate approach. Just stick with an easy low cost index and divert some fixed % of the returns you get to organizations promoting the cause/viewpoint you support. Trying to get a non-Israel index will cost time/money so you'd be giving up some of that "normal" index return anyways.

[PoutineLover]

So it does seem like ending investment in Israel specifically is not that hard, or practically negligeable anyway, but ending investments in companies that sell anything to Israel would be very complicated. The middle ground seems to be investing in socially responsible indexes that don't hold weapons, so I think at least in the interim I'll work towards that and directly donate to causes that are trying to help over there. Thanks for input from those who weighed in!

[MustacheAndaHalf]

VGRO allocates 15.42% to FTSE all-world ex North America.  Looking at other index funds, FTSE ex-US allocates about 0.5% to Israel, maybe increase that to 0.55% to map ex-US into ex-North America.  You could multiply those two (0.1542 x 0.0055 = 0.00085) to figure out what amount of VGRO is invested in Israel.
https://www.morningstar.com/etfs/xtse/vgro/portfolio

One caveat: changing your investments does not send a message.  It risks you feeling that you did something, when that act will not be noticed.  Your posting in a forum has far more impact than changing investments.  Calling Vanguard Canada and asking for an Israel divested product does more than actually buying or selling ETFs.

That caveat out of the way, you could take the amount you invested in VGRO, divide it by 1180, and short that amount of iShares MSCI Israel ETF (EIS).  You would keep VGRO, but subtract the performance of Israeli stocks with a short position (negative shares).

[techwiz]

While a honorable idea to divest I think it would be creating a lot more work than it is worth to your bottom line vs positive impact of your divesting. If you are also removing weapon manufactures many large companies have their hand in the defense industry so you would be removing quite a number of large companies. As some others have suggested I would keep the index investing and direct some profits/returns to helpful charities or organizations to have a greater impact.

There are some social Socially Responsible Investing (SRI) ETF funds and investment options available, but from my brief look at them they had high fees and less than average returns. My cynical take is companies offer these to make more profit not to really make a difference.