Are you talking about sustainable/ethical investments? Because that’s straight up incorrect, on average sustainable funds (often called ESG for “ethical, social, governance”) outperform the market. Commonwealth bank, one of Australia’s big four banks would not be making this move to end loans to the fossil fuel industry if it was genuinely going to impact their bottom line.
Their bottom line might improve with the publicity they get for cutting off the fossil fuel companies. We don’t even know how much they got from those anyway. They might not be giving up much.
And ESGs can outperform in some years. But over the long term (10+ years), and with the increased management fees, they don’t.
The vanguard ESGV fund is, I think, similar to a total-market index fund but with fossil fuels removed, and it only has a very slight increase in management fees compared to their standard index funds (I think it’s expense ratio is 0.09).
However, like many index funds, it’s invested heavily into Nvidia, Google, Meta, Amazon, Tesla, Microsoft, Apple, etc. So a lot of that investment money isn’t going to ethical companies, and if the AI bubble pops, those funds will be hit fairly hard (along with the whole market).
Are you talking about sustainable/ethical investments? Because that’s straight up incorrect, on average sustainable funds (often called ESG for “ethical, social, governance”) outperform the market. Commonwealth bank, one of Australia’s big four banks would not be making this move to end loans to the fossil fuel industry if it was genuinely going to impact their bottom line.
Their bottom line might improve with the publicity they get for cutting off the fossil fuel companies. We don’t even know how much they got from those anyway. They might not be giving up much.
And ESGs can outperform in some years. But over the long term (10+ years), and with the increased management fees, they don’t.
The vanguard ESGV fund is, I think, similar to a total-market index fund but with fossil fuels removed, and it only has a very slight increase in management fees compared to their standard index funds (I think it’s expense ratio is 0.09).
However, like many index funds, it’s invested heavily into Nvidia, Google, Meta, Amazon, Tesla, Microsoft, Apple, etc. So a lot of that investment money isn’t going to ethical companies, and if the AI bubble pops, those funds will be hit fairly hard (along with the whole market).