The Stockspot Sustainable Portfolios have been designed to enable clients to invest in a way that aligns with their personal values to help create a more sustainable future.
Below are some frequently asked questions (FAQs) about the Stockspot Sustainable Portfolios.
- What is sustainable investing?
- What are the ETFs used in Stockspot’s Sustainable Portfolios?
- How do the Sustainable Portfolios differ from the Stockspot Model Portfolios?
- What fees do sustainable ETFs charge?
- How do I switch my Stockspot Portfolio into a Sustainable Portfolio?
- Do I have to switch? Can I just open up a new account and have 2 separate portfolios?
- What criteria or ethical screens are used to select sustainable companies?
- Will the Stockspot Sustainable Portfolios still be diversified?
What is sustainable investing?
Sustainable investing aims to achieve long term wealth creation by investing in companies that demonstrate positive environmental and social impact.
Which ETFs are used in Stockspot’s Sustainable Portfolios?
The Stockspot Sustainable Portfolios include the following ETFs:
- BetaShares Australian Sustainability Leaders ETF (FAIR)
- Vaneck Vectors MSCI International Sustainable Equity ETF (ESGI)
- BetaShares Global Sustainability Leaders ETF (ETHI)
- iShares Core Composite Bond ETF (IAF)
- Global X Physical Gold ETF (GOLD)
We undertook our own detailed research into the universe of sustainable investment products to ensure that the Stockspot Sustainable Portfolios include the most suitable investment options from a risk, return, sustainability and cost perspective.
All the sustainable share ETFs chosen are certified by the Responsible Investment Association Australasia (RIAA) as ‘Certified Ethical Investments’, and have strong ratings from agencies like the Ethical Advisers Co-operative.
How do the Sustainable Portfolios differ from the Stockspot Model Portfolios?
Returns from the Stockspot Sustainable Portfolios will differ to the Stockspot Model Portfolios due to differences in country and sector allocations, as well as underlying shares.
The Stockspot Sustainable Portfolios have a higher allocation to countries like the USA and Europe, with a greater focus on the healthcare sector, but fewer emerging market shares and energy sector exposure.
The ETFs used in the Stockspot Sustainable Portfolios have higher ETF fees but similar expected long term returns and risk.
Instead of viewing s sustainable investing as a way of trying to beat the broader market index, it should be viewed as an approach to investing based on your personal ethics and preferences.
There will be times where sustainable investing beats the broad market index and times when it doesn’t. This is all due to the different underlying shares.
What fees do Stockspot Sustainable Portfolios ETFs charge?
All ETFs charge a management fee. This is an indirect cost deducted directly from the daily ETF price. The ETFs used in the Stockspot Sustainable Portfolios charge between 0.15% to 0.59% per year. This is lower than most ‘active’ ethical funds but higher than the index ETFs used in the core Stockspot Model Portfolios.
The weighted average fee of Stockspot Sustainable Portfolios range from 0.32% to 0.47% p.a. (The Stockspot Model Portfolios are 0.24% to 0.28% p.a.).
See summary table below of the weighted average ETF fees (p.a.):
|Model Portfolios||Sustainable Portfolios||Difference|
How do I switch my Stockspot Portfolio into a Sustainable Portfolio?
To change your portfolio strategy as an existing Stockspot client, go to the ‘Portfolio Settings‘ section of your dashboard. Select ‘make my portfolio sustainable‘ and confirm your new strategy by signing your updated investment agreement. That’s all you need to do, we’ll manage the rest and your portfolio should be fully updated in 2-3 business days.
Please keep in mind that switching your portfolio involves selling your existing holdings and may lead to capital gains, so we recommend that you first seek taxation advice. It’s also possible to create a new account with us for your sustainable portfolio and we can link your accounts together.
Do I have to switch? Can I just open up a new account and have two separate portfolios?
You can have two separate portfolios (i.e. one being your current Stockspot Model Portfolio, and the second being the Stockspot Sustainable Portfolio).
All you need to do is complete a second application for the second strategy and start investing. Note: you will need a separate email address for this new account. Once your second account is set up we can then help set up your dashboard to view multiple accounts. You can sign up with the new account here.
A handy little trick alot of our clients do is if they have a gmail or hotmail email address, they just add a “+1” or “+xyz” right before the @ sign. It can be any string of characters to create an alias (e.g. firstname.lastname@example.org or email@example.com). It ensures all email will still be delivered to the primary contact.
What criteria or ethical screens are used to select sustainable companies?
The Stockspot Sustainable Portfolios employ screening criteria to ensure your money is invested with companies that are demonstrating good sustainable practices. The ETFs we use have exposure to broad sustainable initiatives targeting environmental, social and governance (ESG) factors:
- Environmental: climate change, carbon emission and footprint, waste and toxic emission, clean technology and renewable energy.
- Social: employee wellbeing, supply chain standards, product safety, privacy/data, good stakeholder management, and community impact.
- Governance: board diversity (e.g. independence and gender diversity), executive pay remuneration, accounting and business practices, corruption, and transparency.
The share ETFs in the Stockspot Sustainable Portfolios include negative screening, meaning we avoid companies that have direct or significant exposure to activities in non-sustainable practices, such as fossil fuel production, gas pipelines, gambling, adult entertainment, weapons, alcohol, tobacco, animal testing, detention centres, nuclear energy, junk food, and human rights controversies etc.
The focus was on making an environmentally friendly portfolio while also incorporating the United Nations Sustainable Development Goals (SDGs). With the pivotal point being on decarbonisation, we removed companies that have high fossil fuel reserves, which are a major source of global greenhouse gas emissions.
The Stockspot Sustainable Portfolios also prioritise a positive screening and impact element, ensuring companies that are leading in sustainable activities (such as renewable energy, recycling, and energy efficient transport) are included. The focus is to include low carbon emissions supporting companies that reduce greenhouse gas emissions (i.e. carbon leaders).
The companies in the Stockspot Sustainable Portfolios generate 80-90% fewer carbon emissions compared to a typical share portfolio.
Will the Stockspot Sustainable Portfolios still be diversified?
The Stockspot Sustainable Portfolios include the three key asset classes required for broad diversification: shares, bonds and gold. High grade government and corporate bonds provide steady income and also help increase the defensiveness of your portfolio. Gold is also an important diversifier and helps to mitigate market risk and cushion sharemarket falls. Gold has lower emission intensity than other metals, and is used as a catalyst to help convert carbon dioxide into useful fuels via solar panels or wind turbines.