Author Topic: Low-cost index fund that excludes fossil fuels?  (Read 12624 times)

sandmaninator

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Low-cost index fund that excludes fossil fuels?
« on: September 22, 2015, 05:13:11 PM »

Low-cost index fund that excludes fossil fuels?
Does such a thing exist?  I do not see how ownership interest in such commodities could be ethical.

Regards,
Sandman

nanu

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #1 on: September 22, 2015, 05:19:17 PM »
Ethics aside (I don't disagree, but not sure this is the place for it), a very quick Google search found this: http://fossilfreeindexes.com

BarkyardBQ

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #2 on: September 22, 2015, 05:23:42 PM »
http://www.marketwatch.com/story/personal-beliefs-dont-belong-in-your-retirement-account-2015-08-31

Quote
Although it is perfectly understandable for an investor to want to avoid owning stocks that conflict with personal beliefs, there is no room for emotion in the investment process

Quote
Effectiveness: Owning a stock of a company has little to no effect on its revenue generation, earnings, dividend safety, and/or compensation for management. A stock is nothing more than a claim on a percentage of the equity for a company.

Quote
Then, if a gain is realized on an investment that conflicts with a belief, they should take those proceeds and donate them to a charity that they support. Not only will they be making a far more powerful impact, they will also likely qualify for a tax deduction.
« Last Edit: September 22, 2015, 05:26:07 PM by BackyarBQ »

Jeremy E.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #3 on: September 22, 2015, 10:30:24 PM »
https://personal.vanguard.com/us/funds/snapshot?FundId=0213&FundIntExt=INT
VFTSX
This is probably the closest to what you're looking for, but it seems to underperform the S&P 500

mrpercentage

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #4 on: September 22, 2015, 10:55:28 PM »
Any REIT.

VNQ is probably a good start.

Oil, natural gas, and coal are deeply imbedded. We all have to pick our battles but if its to go a more natural route then you should probably also ban companies like Monsanto and a few Love Canal producing chemical companies. REITs are pretty good about side stepping all of that. If you hand pick them you can get real specific from internet mainframe rentals (DLR), hospitals (HCP), doctors offices (DOC),  retail (0)/(NNN), farmland (LAND), and mortgages (UDF).

You can also use Sector Spyder ETFs. You can simply remove the XLE and buy all the other sectors. Done.
« Last Edit: September 22, 2015, 11:01:18 PM by mrpercentage »

ShoulderThingThatGoesUp

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #5 on: September 23, 2015, 05:56:47 AM »
Just having fun:

internet mainframe rentals (DLR)

Big power sucks, most power is produced with fossil fuels.

Quote
hospitals (HCP), doctors offices (DOC)

Lots of drugs produced from synthetic chemistry from petroleum used here. They keep the lights on all the time.

Quote
retail (0)/(NNN)

Cheap goods for consumption produced by unsafe Chinese factories run off of dirty coal power.

Quote
farmland (LAND)

Artificial fertilizer derived from natural gas is a big part of what makes farmland as valuable as it is.

Quote
mortgages (UDF)

Investing in suburban sprawl, contributing to the car culture.

Fossil fuels are an integral part of our society. You can work to change that, but you can't escape being connected to them.

Edited because my "/" key isn't working well.
« Last Edit: September 23, 2015, 12:38:24 PM by ShoulderThingThatGoesUp »

hodedofome

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #6 on: September 23, 2015, 08:17:50 AM »
Very difficult to only buy certain companies based on moral reasons. As for petroleum, so much of what we have is produced with it, and most energy comes from coal and oil/gas.

I decided I'd cut down on my personal consumption, but I can't really get away from indirectly supporting things I don't like with my investment dollars.

BarkyardBQ

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #7 on: September 23, 2015, 09:41:57 AM »
Might as well exclude companies that make any of the following:

Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
Floor Wax
Ballpoint Pens
Football Cleats
Upholstery
Sweaters
Boats
Insecticides
Bicycle Tires
Sports Car Bodies
Nail Polish
Fishing lures
Dresses
Tires
Golf Bags
Perfumes
Cassettes
Dishwasher parts
Tool Boxes
Shoe Polish
Motorcycle Helmet
Caulking
Petroleum Jelly
Transparent Tape
CD Player
Faucet Washers
Antiseptics
Clothesline
Curtains
Food Preservatives
Basketballs
Soap
Vitamin Capsules
Antihistamines
Purses
Shoes
Dashboards
Cortisone
Deodorant
Footballs
Putty
Dyes
Panty Hose
Refrigerant
Percolators
Life Jackets
Rubbing Alcohol
Linings
Skis
TV Cabinets
Shag Rugs
Electrician's Tape
Tool Racks
Car Battery Cases
Epoxy
Paint
Mops
Slacks
Insect Repellent
Oil Filters
Umbrellas
Yarn
Fertilizers
Hair Coloring
Roofing
Toilet Seats
Fishing Rods
Lipstick
Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber
Speakers
Plastic Wood
Electric Blankets
Glycerin
Tennis Rackets
Rubber Cement
Fishing Boots
Dice
Nylon Rope
Candles
Trash Bags
House Paint
Water Pipes
Hand Lotion
Roller Skates
Surf Boards
Shampoo
Wheels
Paint Rollers
Shower Curtains
Guitar Strings
Luggage
Aspirin
Safety Glasses
Antifreeze
Football Helmets
Awnings
Eyeglasses
Clothes
Toothbrushes
Ice Chests
Footballs
Combs
CD's & DVD's
Paint Brushes
Detergents
Vaporizers
Balloons
Sun Glasses
Tents
Heart Valves
Crayons
Parachutes
Telephones
Enamel
Pillows
Dishes
Cameras
Anesthetics
Artificial Turf
Artificial limbs
Bandages
Dentures
Model Cars
Folding Doors
Hair Curlers
Cold cream
Movie film
Soft Contact lenses
Drinking Cups
Fan Belts
Car Enamel
Shaving Cream
Ammonia
Refrigerators
Golf Balls
Toothpaste
Gasoline

http://www.ranken-energy.com/products%20from%20petroleum.htm
http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf
« Last Edit: September 23, 2015, 09:59:48 AM by BackyarBQ »

Mntngoat

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #8 on: September 23, 2015, 09:56:37 AM »
seems to me excluding fossil fuel index funds is fairly short sighted, unless performance is  not your long term goal.

ML

Tjat

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #9 on: September 23, 2015, 09:57:59 AM »
You could also by VTSAX and proportionally short a fossil fuel ETF

okobrien

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #10 on: September 25, 2015, 06:14:59 AM »
Might as well exclude companies that make any of the following:

Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
Floor Wax
Ballpoint Pens
Football Cleats
Upholstery
Sweaters
Boats
Insecticides
Bicycle Tires
Sports Car Bodies
Nail Polish
Fishing lures
Dresses
Tires
Golf Bags
Perfumes
Cassettes
Dishwasher parts
Tool Boxes
Shoe Polish
Motorcycle Helmet
Caulking
Petroleum Jelly
Transparent Tape
CD Player
Faucet Washers
Antiseptics
Clothesline
Curtains
Food Preservatives
Basketballs
Soap
Vitamin Capsules
Antihistamines
Purses
Shoes
Dashboards
Cortisone
Deodorant
Footballs
Putty
Dyes
Panty Hose
Refrigerant
Percolators
Life Jackets
Rubbing Alcohol
Linings
Skis
TV Cabinets
Shag Rugs
Electrician's Tape
Tool Racks
Car Battery Cases
Epoxy
Paint
Mops
Slacks
Insect Repellent
Oil Filters
Umbrellas
Yarn
Fertilizers
Hair Coloring
Roofing
Toilet Seats
Fishing Rods
Lipstick
Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber
Speakers
Plastic Wood
Electric Blankets
Glycerin
Tennis Rackets
Rubber Cement
Fishing Boots
Dice
Nylon Rope
Candles
Trash Bags
House Paint
Water Pipes
Hand Lotion
Roller Skates
Surf Boards
Shampoo
Wheels
Paint Rollers
Shower Curtains
Guitar Strings
Luggage
Aspirin
Safety Glasses
Antifreeze
Football Helmets
Awnings
Eyeglasses
Clothes
Toothbrushes
Ice Chests
Footballs
Combs
CD's & DVD's
Paint Brushes
Detergents
Vaporizers
Balloons
Sun Glasses
Tents
Heart Valves
Crayons
Parachutes
Telephones
Enamel
Pillows
Dishes
Cameras
Anesthetics
Artificial Turf
Artificial limbs
Bandages
Dentures
Model Cars
Folding Doors
Hair Curlers
Cold cream
Movie film
Soft Contact lenses
Drinking Cups
Fan Belts
Car Enamel
Shaving Cream
Ammonia
Refrigerators
Golf Balls
Toothpaste
Gasoline

http://www.ranken-energy.com/products%20from%20petroleum.htm
http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf
In addition to not investing in any of these you should make sure not to use any of these products. If fossil fuels are evil so are all the products that depend on them.  Adios modern life.

Scandium

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #11 on: September 25, 2015, 07:36:50 AM »
Not saying this is a good idea (or really any more ethical), but you may be in luck:
http://www.etftrends.com/2015/09/sp-without-the-pulp-new-sp-500-ex-sector-etfs-introduced/

BarkyardBQ

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #12 on: September 25, 2015, 09:01:26 PM »
Quote
Then, if a gain is realized on an investment that conflicts with a belief, they should take those proceeds and donate them to a charity that they support. Not only will they be making a far more powerful impact, they will also likely qualify for a tax deduction.

You could pick your ideal ethically based asset allocation with whatever funds you can find, track it for life etc. Meanwhile, actually invest in a globally diversified portfolio and see which does better. If you have gains beyond your ethical portfolio donate those returns to your favorite cause.
« Last Edit: September 25, 2015, 09:03:05 PM by BackyarBQ »

Jay Bird

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #13 on: September 27, 2015, 08:50:40 AM »
Not sure that this is exactly the same as you are asking but isn't that along the lines of what Leonardo Dicaprio is trying to do:
http://money.cnn.com/2015/09/23/investing/dicaprio-fossil-fuels/index.html

innkeeper77

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #14 on: September 27, 2015, 08:59:28 AM »
What about going the opposite route- purchasing actual oil company shares, (in my opinion, the oil majors are fairly safe) and always voting for directors and policies that will shrink long term oil dependence and improve the environmental sustainability of the planet? You can make a difference by owning these stocks, but no difference at all by avoiding them. Remember, unless you are buying into an IPO, your investment dollars do not go to the company at all- they pay you instead, and have to take your votes into account!

Note: Oil investments are HIGHLY cyclical. Please do not take this post as professional investment advice. I personally am growing a small position in Exxon Mobil as a 50+ year time horizon position, and may add other oil majors later.

PizzaSteve

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #15 on: September 27, 2015, 10:54:29 AM »
I will approach this another way.  It is kind of like saying that you don't like water policies or energy as a whole, due to their treatment.  To not support this you would need to completely disconnect yourself from the grid, both for water and power.  In the stock investing world our modern economy is build upon the use of fossil fuels.  To avoid any investment in the oil economy you pretty much need to completely avoid stocks and most national currencies of any kind.  Holding dollars = shares of US interests that include strategic reserves and wars to preserve oil supply.  Not to be flip, but it is a very slippery slope.   

I like the idea to vote your conscience and to try to reduce the possibly negative influence of big oil companies.

DarinC

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #16 on: September 27, 2015, 03:31:25 PM »
In addition to not investing in any of these you should make sure not to use any of these products. If fossil fuels are evil so are all the products that depend on them.  Adios modern life.
I think that's a little hyperbolic. Plenty of people think that we need to substantially reduce Fossil Fuel consumption, but don't think we need to completely eliminate it.

In terms of what the OP is looking for, besides socially responsible index funds/ETFs, someone could also try to mirror the holdings of a group that has mostly divested from FFs if that info is available. As long as you keep your costs low and your expectations realistic (you'll may underperform the market as a whole), I don't see any issues.
« Last Edit: September 27, 2015, 03:41:46 PM by DarinC »

homestead neohio

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #17 on: December 15, 2015, 12:40:00 PM »
I understand the "why" of doing this is controversial, and everyone has differing opinions, are all worth considering.  OP asked what options are, not if it is the highest return, or least risky return.  Not sure if some might think that anti-Mustachian, but not everyone is trying to get to FI ASAP at all costs, even if it means investing contrary to what they feel is an "ethical imperative" like OP.  It is good to point out potential drawbacks, but those may be acceptable to some.

I believe in the diversification and low costs of index funds, but I personally don't want to be part owner in a company engaged in the extraction or refining of fossil fuels which I believe need to stay in the ground.  I'm willing to accept slightly lower returns, though it is not clear to me that I'll have to.  Before you call me a hypocrite, I recognize I still rely on fossil fuels daily for most aspects of my modern existence.  But this is no reason to give up and not try to facilitate changes for the better!  I'm also trying to make other changes in my life to reduce fossil fuel reliance and CO2 emissions.  Efficient car, PV array on the roof, replaced oil furnace with electric (tied to solar).  I'm trying to reach FI, and I'll drive a LOT less after FI.  I don't naively think my tiny 'stache will really matter to the fossil fuel industry, but if enough individual people make this choice, that can at least generate some meaningful discussion and be a catalyst for change.  I have a better chance at succeeding there than owning a company whose product I'm phasing out of my life and trying to convince them they should listen to me and not extract and sell there proven oil/coal/gas reserves (their core business).  Not sure why anyone would think that could be effective.  To me that is like voting for a politician I disagree with and then trying to meet with her saying she should do everything differently because I voted for her.  If you really think that will work, please explain.

I've found this link useful in determining how much fossil fuel exposure a given fund has:  http://fossilfreefunds.org/funds.  It doesn't have all investment options, but many big ones are there.  I found some of the funds I held in my 401k held up to 15% fossil fuel companies (international stock fund), others were as low as 1.5%. 

A big thanks to those who provided some options to research further. 

There are some socially responsible funds out there trying to beat the market, but they of course have high costs, many even higher than other actively managed funds which can pick from any company, not restricted by industry.   One example is PARWX, 0.95% expense ratio.  I personally have chosen to split among Vanguard Sector ETFs that do not include energy or utilities.  I'm not sure the best way to balance among these since not all sectors are the same size, but I've taken a shot to divide it without what I consider being overweighted in one sector.    I'm open to any suggests on that.

VNQ for REIT
VHT for Health Care
VGT for IT
VDC for Consumer Staples
VCR for Consumer Discretionary
VOX for Telecom
VHF for Financial Services

Grog

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #18 on: December 15, 2015, 02:47:13 PM »
Market (also demand) decide if an economy is more green or more fossil-dependent, not supply. If everyone goes full green hippie style then automatically only green companies will be a part of the s&p500. It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

Sent from my YD201 using Tapatalk


thd7t

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #19 on: December 15, 2015, 02:59:04 PM »
Might as well exclude companies that make any of the following:

Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
Floor Wax
Ballpoint Pens
Football Cleats
Upholstery
Sweaters
Boats
Insecticides
Bicycle Tires
Sports Car Bodies
Nail Polish
Fishing lures
Dresses
Tires
Golf Bags
Perfumes
Cassettes
Dishwasher parts
Tool Boxes
Shoe Polish
Motorcycle Helmet
Caulking
Petroleum Jelly
Transparent Tape
CD Player
Faucet Washers
Antiseptics
Clothesline
Curtains
Food Preservatives
Basketballs
Soap
Vitamin Capsules
Antihistamines
Purses
Shoes
Dashboards
Cortisone
Deodorant
Footballs
Putty
Dyes
Panty Hose
Refrigerant
Percolators
Life Jackets
Rubbing Alcohol
Linings
Skis
TV Cabinets
Shag Rugs
Electrician's Tape
Tool Racks
Car Battery Cases
Epoxy
Paint
Mops
Slacks
Insect Repellent
Oil Filters
Umbrellas
Yarn
Fertilizers
Hair Coloring
Roofing
Toilet Seats
Fishing Rods
Lipstick
Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber
Speakers
Plastic Wood
Electric Blankets
Glycerin
Tennis Rackets
Rubber Cement
Fishing Boots
Dice
Nylon Rope
Candles
Trash Bags
House Paint
Water Pipes
Hand Lotion
Roller Skates
Surf Boards
Shampoo
Wheels
Paint Rollers
Shower Curtains
Guitar Strings
Luggage
Aspirin
Safety Glasses
Antifreeze
Football Helmets
Awnings
Eyeglasses
Clothes
Toothbrushes
Ice Chests
Footballs
Combs
CD's & DVD's
Paint Brushes
Detergents
Vaporizers
Balloons
Sun Glasses
Tents
Heart Valves
Crayons
Parachutes
Telephones
Enamel
Pillows
Dishes
Cameras
Anesthetics
Artificial Turf
Artificial limbs
Bandages
Dentures
Model Cars
Folding Doors
Hair Curlers
Cold cream
Movie film
Soft Contact lenses
Drinking Cups
Fan Belts
Car Enamel
Shaving Cream
Ammonia
Refrigerators
Golf Balls
Toothpaste
Gasoline

http://www.ranken-energy.com/products%20from%20petroleum.htm
http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf
In addition to not investing in any of these you should make sure not to use any of these products. If fossil fuels are evil so are all the products that depend on them.  Adios modern life.
Yeah.  No one should ever try to do anything that they believe in.  The perfect is the enemy of the good.  We should all be quitters.  People who try to behave ethically are the worst. 

Seriously, if an investor doesn't want to invest in fossil fuels, they shouldn't be getting answers about why they shouldn't, other than performance.  The rest is their business. 

BarkyardBQ

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #20 on: December 15, 2015, 03:06:37 PM »
It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

I think this says it best.

Unless you're directly investing the capital for these products, owning stock has little effect.
« Last Edit: December 15, 2015, 03:08:52 PM by BackyarBQ »

YK-Phil

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #21 on: December 15, 2015, 03:08:39 PM »
Might as well exclude companies that make any of the following:

Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
Floor Wax
Ballpoint Pens
Football Cleats
Upholstery
Sweaters
Boats
Insecticides
Bicycle Tires
Sports Car Bodies
Nail Polish
Fishing lures
Dresses
Tires
Golf Bags
Perfumes
Cassettes
Dishwasher parts
Tool Boxes
Shoe Polish
Motorcycle Helmet
Caulking
Petroleum Jelly
Transparent Tape
CD Player
Faucet Washers
Antiseptics
Clothesline
Curtains
Food Preservatives
Basketballs
Soap
Vitamin Capsules
Antihistamines
Purses
Shoes
Dashboards
Cortisone
Deodorant
Footballs
Putty
Dyes
Panty Hose
Refrigerant
Percolators
Life Jackets
Rubbing Alcohol
Linings
Skis
TV Cabinets
Shag Rugs
Electrician's Tape
Tool Racks
Car Battery Cases
Epoxy
Paint
Mops
Slacks
Insect Repellent
Oil Filters
Umbrellas
Yarn
Fertilizers
Hair Coloring
Roofing
Toilet Seats
Fishing Rods
Lipstick
Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber
Speakers
Plastic Wood
Electric Blankets
Glycerin
Tennis Rackets
Rubber Cement
Fishing Boots
Dice
Nylon Rope
Candles
Trash Bags
House Paint
Water Pipes
Hand Lotion
Roller Skates
Surf Boards
Shampoo
Wheels
Paint Rollers
Shower Curtains
Guitar Strings
Luggage
Aspirin
Safety Glasses
Antifreeze
Football Helmets
Awnings
Eyeglasses
Clothes
Toothbrushes
Ice Chests
Footballs
Combs
CD's & DVD's
Paint Brushes
Detergents
Vaporizers
Balloons
Sun Glasses
Tents
Heart Valves
Crayons
Parachutes
Telephones
Enamel
Pillows
Dishes
Cameras
Anesthetics
Artificial Turf
Artificial limbs
Bandages
Dentures
Model Cars
Folding Doors
Hair Curlers
Cold cream
Movie film
Soft Contact lenses
Drinking Cups
Fan Belts
Car Enamel
Shaving Cream
Ammonia
Refrigerators
Golf Balls
Toothpaste
Gasoline

http://www.ranken-energy.com/products%20from%20petroleum.htm
http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf
In addition to not investing in any of these you should make sure not to use any of these products. If fossil fuels are evil so are all the products that depend on them.  Adios modern life.

In case you have not realized it, there is such as thing as balance. In life as in financial matters.

homestead neohio

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #22 on: December 15, 2015, 06:53:17 PM »
Market (also demand) decide if an economy is more green or more fossil-dependent, not supply. If everyone goes full green hippie style then automatically only green companies will be a part of the s&p500. It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

Sent from my YD201 using Tapatalk

Why not do both?  Taking action and discussing it with others has the opportunity to further change both sides as well.

Grog

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #23 on: December 15, 2015, 11:19:33 PM »

Low-cost index fund that excludes fossil fuels?
Does such a thing exist?  I do not see how ownership interest in such commodities could be ethical.

Regards,
Sandman

Hi,
in my post before I pointed out how pointless it is to try to change the economy from the supply side (investing). But your question is different; as you have formulated it you have an ethical/principle problem, not a "influence the behaviour of the big bad company" problem.

MSCI, an index provider, offers different index where companies are chosen based on ethical principle, like:
MSCI Global Climate Index
MSCI Socially responsible index

you could read more about it here:
https://www.msci.com/esg-indexes

if some of these index satisfy you, now you have to find a fund provider offering them (probably an ETF), like:
https://www.ishares.com/us/products/239692/ishares-msci-usa-esg-select-etf

cerat0n1a

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #24 on: December 16, 2015, 03:30:34 AM »
It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

I agree, but I would recognise that people may decide not to invest in fossil fuels because they don't feel comfortable from a moral standpoint making money themselves from it. It doesn't have to be done with a view to trying to change the world.

By analogy, if I decide not to invest in part ownership of a brothel or strip club, it has basically no effect on the world at all, other than allowing me to feel morally superior to those who do. And probably avoid being kicked out by my wife....

Grog

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #25 on: December 16, 2015, 05:05:54 AM »


I agree, but I would recognise that people may decide not to invest in fossil fuels because they don't feel comfortable from a moral standpoint making money themselves from it. It doesn't have to be done with a view to trying to change the world.

By analogy, if I decide not to invest in part ownership of a brothel or strip club, it has basically no effect on the world at all, other than allowing me to feel morally superior to those who do. And probably avoid being kicked out by my wife....

I agree, that's why I've added a "pure answer" to the OP questions in the post right above yours :)

DarinC

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #26 on: December 19, 2015, 08:19:55 PM »
I disagree. In the short run, divestment from any industry does affect it to the extent that it increases the costs of borrowing. It's not huge with interest rates at more or less nothing, but it's something. With that said, the biggest impact is on public policy in the long run, and that can substantially affect a company's bottom line.

P0IS0N

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #27 on: December 20, 2015, 10:44:49 AM »

Low-cost index fund that excludes fossil fuels?
Does such a thing exist?  I do not see how ownership interest in such commodities could be ethical.

Regards,
Sandman
I like how ethics are questioned now. I'm curious if you would have asked for a "Low-cost index fund that excludes fossil fuels" when the oil price was rising above 100$/barrel.

povertystrickenbastard

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #28 on: December 20, 2015, 11:23:44 AM »
I thank the lords every day for fossil fuels.  Without them humanity would have barely progressed out of the dark ages.

JPatch

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #29 on: December 21, 2015, 07:06:28 AM »
I thank the lords every day for fossil fuels.  Without them humanity would have barely progressed out of the dark ages.

This.

I recommend investing in fossil fuels.  We are all alive and in good health because of them.  Don't lower your investment returns to protest something that is a net positive for humanity (and the earth as it so happens).  I wish more people would realize fossil fuels are great, rather than evil or just a necessary evil.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #30 on: December 21, 2015, 08:00:16 AM »
I thank the lords every day for fossil fuels.  Without them humanity would have barely progressed out of the dark ages.
This.

I recommend investing in fossil fuels.  We are all alive and in good health because of them.  Don't lower your investment returns to protest something that is a net positive for humanity (and the earth as it so happens).  I wish more people would realize fossil fuels are great, rather than evil or just a necessary evil.
They could be the best thing in the world, but there's no way to replace existing deposits, which are getting more expensive to extract as marginal sources replace the best ones. On top of that, coal/oil/gas run a very real risk of becoming stranded assets, with so much R&D being invested into alternatives. When the rising cost of extracting and refining the product exceeds the falling price for the alternative solution, that application ceases to be viable. This has already happened with some products, and ultimately could happen with most or all. Even plastics are seeing interesting non-petroleum formulations now. That is why fossil-heavy portfolios scare me. I don't have to like or dislike the industries to see the cracks forming.

thd7t

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #31 on: December 21, 2015, 08:08:24 AM »

Low-cost index fund that excludes fossil fuels?
Does such a thing exist?  I do not see how ownership interest in such commodities could be ethical.

Regards,
Sandman
I like how ethics are questioned now. I'm curious if you would have asked for a "Low-cost index fund that excludes fossil fuels" when the oil price was rising above 100$/barrel.
I agree.  Recent history has shown that oil can be valued much higher.  By taking a stand now, OP is showing real dedication to values.  Buying while it's low would do more to aid an industry that he doesn't believe in.  Further, by eschewing the potential higher returns, he is demonstrating his values.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #32 on: December 21, 2015, 08:28:53 AM »
I like how ethics are questioned now. I'm curious if you would have asked for a "Low-cost index fund that excludes fossil fuels" when the oil price was rising above 100$/barrel.
A wise investor would have been looking to divest or at least hedge, regardless of the ethical questions, in such an environment. Not only was it economically unsustainable, it drove major investments in alternative technologies.

I agree.  Recent history has shown that oil can be valued much higher.  By taking a stand now, OP is showing real dedication to values.  Buying while it's low would do more to aid an industry that he doesn't believe in.  Further, by eschewing the potential higher returns, he is demonstrating his values.
I don't have any ethical problems with the industry but I've been convinced the long-term risks are understated for years now. The volatility alone is enough to make me nervous, and the unpredictable future returns make it hard to get excited about high yields. How much does the price go up to offset an actual decline in production? How does one pick winners and losers in an era of disruption? And how can investing in the entire industry be a winning strategy when global revenue is so unpredictable? I can't get past these questions.

thd7t

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #33 on: December 21, 2015, 10:38:21 AM »
I like how ethics are questioned now. I'm curious if you would have asked for a "Low-cost index fund that excludes fossil fuels" when the oil price was rising above 100$/barrel.
A wise investor would have been looking to divest or at least hedge, regardless of the ethical questions, in such an environment. Not only was it economically unsustainable, it drove major investments in alternative technologies.

I agree.  Recent history has shown that oil can be valued much higher.  By taking a stand now, OP is showing real dedication to values.  Buying while it's low would do more to aid an industry that he doesn't believe in.  Further, by eschewing the potential higher returns, he is demonstrating his values.
I don't have any ethical problems with the industry but I've been convinced the long-term risks are understated for years now. The volatility alone is enough to make me nervous, and the unpredictable future returns make it hard to get excited about high yields. How much does the price go up to offset an actual decline in production? How does one pick winners and losers in an era of disruption? And how can investing in the entire industry be a winning strategy when global revenue is so unpredictable? I can't get past these questions.
My response was tongue-in-cheek.  P0IS0N seemed to be talking about buying high and implying that it would have been a great idea.  My basic argument was that if one believes that there is a future in petroleum, the time to buy is when it's down over 60% vs 8? years ago.  Not seeing long term security is a great reason not to buy (low or high)

gaja

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #34 on: December 21, 2015, 11:02:43 AM »
Might as well exclude companies that make any of the following:

Solvents
Diesel fuel
Motor Oil
Bearing Grease
Ink
(...)
Golf Balls
Toothpaste
Gasoline

http://www.ranken-energy.com/products%20from%20petroleum.htm
http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf
In addition to not investing in any of these you should make sure not to use any of these products. If fossil fuels are evil so are all the products that depend on them.  Adios modern life.

Everything produced from fossil fuels can be produced from plant materials such as wood: http://www.borregaard.com/Business-Areas/Other-Businesses
As an example: Almost all of Borregaard's fake vanilla flavour goes to Japan, because the Japanese are willing to pay a little extra for "fossil free". The demand is larger than the supply. (And for those thinking we should save the trees: since the 1920s, the new growth in Norwegian forests has been larger than the biomass that has been taken out. We will soon be lost in the woods.)

P0IS0N

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #35 on: December 21, 2015, 12:13:18 PM »
My response was tongue-in-cheek.  P0IS0N seemed to be talking about buying high and implying that it would have been a great idea.  My basic argument was that if one believes that there is a future in petroleum, the time to buy is when it's down over 60% vs 8? years ago.  Not seeing long term security is a great reason not to buy (low or high)
Actually, I'm not really implying that buying high is a good idea. I'm just talking about perspective. I see many people bummed about the oil prices this year (and it's understandable) and they seem to take their frustration on the oil companies. I was also referring to the time when oil price was on the rise, above 100 and future looked bright and oil stocks were very attractive. I'm not referring to peak or start of downfall.
I do think it's a great time to invest in oil and if the OP shares this belief but prefers not to, he didn't exactly state it in his post. To me it didn't really look like "Oil stocks look like a great investment, but I prefer not to.", it just looked like another oil company bashing, like I'm used to see more and more often, and again, usually rooted in the current oil price and the downfall of oil stocks this year.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #36 on: December 21, 2015, 02:53:29 PM »
My response was tongue-in-cheek.  P0IS0N seemed to be talking about buying high and implying that it would have been a great idea.  My basic argument was that if one believes that there is a future in petroleum, the time to buy is when it's down over 60% vs 8? years ago.  Not seeing long term security is a great reason not to buy (low or high)
Stupid internet and its lack of nonverbal cues *shakes fist*
Yes, if one were confident about the prospects of growing revenue from an irreplaceable product, all else being equal, lower pricing would be better. :)
My response was tongue-in-cheek.  P0IS0N seemed to be talking about buying high and implying that it would have been a great idea.  My basic argument was that if one believes that there is a future in petroleum, the time to buy is when it's down over 60% vs 8? years ago.  Not seeing long term security is a great reason not to buy (low or high)
I do think it's a great time to invest in oil and if the OP shares this belief but prefers not to, he didn't exactly state it in his post. To me it didn't really look like "Oil stocks look like a great investment, but I prefer not to.", it just looked like another oil company bashing, like I'm used to see more and more often, and again, usually rooted in the current oil price and the downfall of oil stocks this year.
That's a lot to read into one post, and maybe I'm extrapolating just as much as you are, but OP (unless he's a post-and-run troll) appears to be asking a simple question for principled reasons. S/he did say "ethical" as opposed to "profitable".
I watched oil prices and stocks for a long time and never figured out an approach that I trust in the long run. Viable replacements for more and more applications are either already fielded or showing promising developments. Even the strongest members of OPEC are caught on the horns of a dilemma - they're squeezed by low prices but afraid to cut market share. What if this is the new normal and every price spike pushes a million drivers into EVs (which are already at lower TCO, and falling)? Etc.

Add to that the latest Paris deal, which is non-binding but still represents a market signal about future production. To actually achieve the benchmark set by that deal, something like 75% of current reserves would have to be left in the ground. If even a fraction of that is actually implemented, it's disastrous for share prices.

Aphalite

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #37 on: December 21, 2015, 03:21:19 PM »
I watched oil prices and stocks for a long time and never figured out an approach that I trust in the long run. Viable replacements for more and more applications are either already fielded or showing promising developments. Even the strongest members of OPEC are caught on the horns of a dilemma - they're squeezed by low prices but afraid to cut market share. What if this is the new normal and every price spike pushes a million drivers into EVs (which are already at lower TCO, and falling)? Etc.

Add to that the latest Paris deal, which is non-binding but still represents a market signal about future production. To actually achieve the benchmark set by that deal, something like 75% of current reserves would have to be left in the ground. If even a fraction of that is actually implemented, it's disastrous for share prices.

I think a big thing about the "oil" stocks is that they're no longer just about oil - they consider themselves energy companies. The big three have all diversified already into natural gas, and it's just a matter of time before they start buying wind/solar companies (although the timeline is longer than you think, technology/costs are still trying to catch up to the enthusiasm). They are really only waiting for the economics on renewables to improve. Rex Tillerson of Exxon for example, mentioned a few months ago at the shareholders meeting that "We choose not to lose money on purpose. - but as soon as the economics make sense, you can bet that internally developed tech or smaller companies will begin to get gobbled up by the giants. Basically, no matter what the source (solar, wind, oil, gas, hydro, bio, whatever), Exxon, Chevron, and Shell will be providing it well into the future

Marus

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #38 on: March 07, 2016, 11:10:05 AM »
Interesting topic.  I share some of the ethical objections with fossil fuel companies and based on their current extraction projections I don't think the long term health of our civilization is compatible with their current business model.  Unless we discover a miracle technology to remove carbon from the atmosphere I don't feel comfortable betting that Exxon and such are going to realize the full value of their drilling investments.

I'm conflicted though, because I'm really not interested in trying to micromanage my investments to get a good balance of returns without investing in ethically questionable companies (and as other folks have pointed out, there are many companies out there that are worthy of scrutiny in that regard...).  I just don't enjoy the process of researching investments that much.  I'd much rather just automate my investing based on sound principles and focus on more fulfilling parts of my life.

Also I'd argue that divesting is just one arrow in the quiver.  Ethical consumerism is also important, as is voting for politicians who will put a moratorium on fracking and engaging in direct political action.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #39 on: March 07, 2016, 12:42:38 PM »
Market (also demand) decide if an economy is more green or more fossil-dependent, not supply. If everyone goes full green hippie style then automatically only green companies will be a part of the s&p500. It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

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The question of what resources we use is just as much a political question as it is a market one.  For example, our country has an abysmal railway system and a highly developed highway system, which causes people to consume  way more gasoline than folks in other countries.  This isn't because the invisible hand of the market made them do it, it's because our politicians made a political decision to make that type of investment.  Because we're in a society that's built to be optimized around motor vehicles, I don't think it's realistic to think we can solve our energy issues by shaming everyone into driving less.  There need to be better developed alternatives in place (better bike lanes, more public transportation, more efficient city planning, etc.) before that can work.

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #40 on: March 07, 2016, 03:15:51 PM »
Market (also demand) decide if an economy is more green or more fossil-dependent, not supply. If everyone goes full green hippie style then automatically only green companies will be a part of the s&p500. It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

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The question of what resources we use is just as much a political question as it is a market one.  For example, our country has an abysmal railway system and a highly developed highway system, which causes people to consume  way more gasoline than folks in other countries.  This isn't because the invisible hand of the market made them do it, it's because our politicians made a political decision to make that type of investment.  Because we're in a society that's built to be optimized around motor vehicles, I don't think it's realistic to think we can solve our energy issues by shaming everyone into driving less.  There need to be better developed alternatives in place (better bike lanes, more public transportation, more efficient city planning, etc.) before that can work.
The US has an abysmal passenger rail system, but that is in part, because we have the most developed freight rail system in the world.  I don't think that this excuses the quality of the passenger rail system, but currently, they share rails, which has really hurt the passenger system.  It's not as simple as "we don't have a railway system".

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Re: Low-cost index fund that excludes fossil fuels?
« Reply #41 on: March 07, 2016, 05:43:43 PM »
Market (also demand) decide if an economy is more green or more fossil-dependent, not supply. If everyone goes full green hippie style then automatically only green companies will be a part of the s&p500. It's pointless to try to change our economy in theb supply side (investing), it makes muc more sense to try to change the other side of the equation (demand)

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The question of what resources we use is just as much a political question as it is a market one.  For example, our country has an abysmal railway system and a highly developed highway system, which causes people to consume  way more gasoline than folks in other countries.  This isn't because the invisible hand of the market made them do it, it's because our politicians made a political decision to make that type of investment.  Because we're in a society that's built to be optimized around motor vehicles, I don't think it's realistic to think we can solve our energy issues by shaming everyone into driving less.  There need to be better developed alternatives in place (better bike lanes, more public transportation, more efficient city planning, etc.) before that can work.
The US has an abysmal passenger rail system, but that is in part, because we have the most developed freight rail system in the world.  I don't think that this excuses the quality of the passenger rail system, but currently, they share rails, which has really hurt the passenger system.  It's not as simple as "we don't have a railway system".

Great point!  Thanks for clarifying that.