Retail and institutional investors have been warming up to ethical investments as returns start to match their traditional counterparts. There’s no better time to hop on – here are five options across asset classes to get your feet wet.
Managing your emotions will help you greatly when investing, especially when trading at a fast pace or placing your bets on assets that are highly volatile. Rein in the emotions of fear and greed and you’ll be well on your way to financial security. However, relying on analyses solely based on logic often meant sidelining your morals and values in the pursuit of higher returns.
For example, NASDAQ-listed firearms and ammunition manufacturer Smith & Wesson was trading at less than US$1 in 2000. Just seven years later, this figure ballooned to US$15 as the USA waged its war on terrorism.
Investors who went long rejoiced as they reaped the rewards of successfully predicting the company’s success. However, a host of geopolitical issues followed and knowing the fallout of this war would eat away at investor’s conscience.
Fortunately, the modern-day investor does not have to make a Faustian bargain in order to construct a robust portfolio. Returns-wise, there are many ethical investments across various asset classes that match traditional options pound for pound.
Here are five of them that you can access via your brokerage right this very moment.
Name + Ticker
S$7.24 (22 Apr 2007)
S$0.81 (26 Jan 2003)
CapitaLand Limited is a household name in Singapore, being the real estate company behind the iconic Jewel Changi Airport and ION Orchard shopping malls. Its stock price is well on the road to recovery after a bumpy 2020.
However, what you might not know much about would be the organisation’s environmental, social, and corporate governance (ESG) credentials.
It’s currently listed in the Dow Jones Sustainability World Index, MSCI World ESG Leaders Index, and MSCI World Socially Responsible Investment index. Its ‘AA’ MSCI rating is, therefore, hardly a surprise. Morningstar subsidiary Sustainalytics also granted CapitaLand Limited a score of 15.6 on its ESG Risk Rating, categorising the firm as ‘Low Risk’.
2. BNP Paribas Aqua
Name + Ticker
BNP Paribas Aqua Classic Cap SGD
Equity (Mutual Fund)
S$140.45 (12 Jan 2021)
S$100 (28 Dec 2017)
French financial institution BNP Paribas ranked within the top 100 in Fortune’s Global 500 list last year, having a market value of more than US$50.2 billion (S$66.6 billion). According to the Corporate Knights Index, the powerhouse bank is also the 31st most sustainable company in the world.
This dedication to sustainability is reflected in the funds that it has set up. Its Aqua mutual fund launched in December 2017 would be one of many, focusing on companies that are in the water sector or water-related industries.
Aqua has garnered the SRI and Febelfin labels from France’s Finance Ministry and Belgium’s Financial Sector Federation respectively.
3. First Solar
Name + Ticker
First Solar (FSLR)
US$317 (5 Nov 2008)
US$11.54 (27 May 2012)
NASDAQ-listed First Solar has been manufacturing solar panels since its inception in 1999, with the firm’s calling card being its industry-leading performance. Case in point: The company attained world records for cell and module efficiency in 2016 and is still holding onto them five years on.
The manufacturer practises what it preaches as well, being heavily invested in sustainable business practices. In 2019, it was awarded an ‘A-’ grade by international non-profit organisation CDP for climate change efforts.
This score was given on the back of lowered greenhouse gas emissions and manufacturing waste intensity, among other highlights.
4. SGX Platts Methanol CFR China Futures
Name + Ticker
SGX Platts Methanol CFR China Futures
(When comparing methanol with heavy fuel)
S$305.50 (12 Jan 2021)
S$190.46 (11 May 2020)
China is no longer a sleeping giant, being very much awake as it moves and shakes industries across the globe. The nation imported 69.3 million metric tonnes of methanol in 2019 alone as it aims to grow its petrochemical and manufacturing sectors. The Chinese government prefers the colourless fuel due to its higher octane rating and clean-burning properties, amongst other benefits.
SGX capitalised on China’s appetite for the alternative fuel in 2020 by offering methanol futures and swap contracts on the exchange in February. The move has paid off, with prices of these futures rising by more than S$60 in just 11 months.
This bull run isn’t set to end anytime soon, with China researching methanol’s viability as a future-proof marine fuel too.
5. First Trust Institutional Preferred Securities and Income ETF
Name + Ticker
First Trust Institutional Preferred Securities and Income ETF (FPEI)
US$20.49 (9 Feb 2020)
US$14.09 (15 Mar 2020)
Incepted in 2017 on the NYSE, First Trust’s Institutional Preferred Securities and Income ETF (FPEI) is an actively managed fund that aims for total returns and to provide current income. Its top holdings largely consist of the U.S dollar and financial institutions, positioning itself as a more unique fund.
Till date, it has generated a 6.28% increase in net asset value, with only one dip in 2020 due to COVID-19.
With regards to sustainability, it’s the only investment on the list with an ‘AAA’ MSCI ESG rating. This means that the portfolio is well-positioned to tackle any issues arising from ESG factors. Should any disruptive ESG events occur, it should not affect this ETF adversely.
With the plethora of options available across asset classes and stock exchanges globally, sustainable investing is more viable than ever before. Now, you have the opportunity to better align your values and beliefs with your portfolio rather than taking a sledgehammer approach of yore such as excluding sin stocks altogether.
The five investments listed above are just the tip of the sustainable investing iceberg. Take a gander through your brokerage and determine what will fill the gaps in your portfolio while letting you oppose unethical or unsustainable businesses. Who says you can’t grow your wealth and (attempt) to save the world?
Read these next:
6 Alternative Investments To Diversify Your Portfolio
Starting A Side Hustle In 2021? These 6 Business Ideas Need Little To $0 Capital
Home Equity: 5 Ways To Turn Your Home Into Cash
Scrip Dividend Scheme: Why Getting Paid In Shares Is One Wise Investment Move
Best Alternatives to Savings Accounts in Singapore (2021)
By Ebel Tang
A geek culture enthusiast who’s also a little too invested in the wide world of whisky and watches. And no, he was not named after the Swiss timepiece brand.