In my previous article, Can Women Really Retire by Investing in Gender Equality?, I highlighted mutual funds that use an active investing approach. In this approach, mutual fund portfolio managers make decisions about what to include and exclude in their mutual fund.
A growing number of people are investing in index mutual funds or exchange-traded funds. Some call it indexing or index investing. Although you cannot invest directly in an index, such as the S&P 500, you can do so through a mutual fund or an exchange-traded fund that tracks an index.
These people have most often heard that low-cost investment overtime wins the race for the best return. Passive investing is also known as low cost investing or index investing. In this approach, mutual fund managers rely on the rules of an index provider for the inclusion of an investment in their fund.
The S&P 500 (Standard & Poors) is probably the most widely referenced index in the USA. In fact, many mutual funds and individuals use it to benchmark their investments.
It is made up of the 500 largest publicly traded US companies. There are more indices to invest in. In fact, this does not represent all the companies in the United States or around the world in which you can invest.
That said, I listed Vanguard’s S&P 500 Index fund, in the Gender Equality Fund Evaluator. Vanguard is best known for turning indices from various providers into a fund you can invest in.
This index fund obtains a B grade in gender equality. However, it gets D grades in Fossil Fuels, Prison Industrial Complex, Military Weapons, and Tobacco. If these are issues for you, you may not be happy with this choice.
I’m not attacking the Vanguard Mutual Fund. The S&P 500 index mutual fund or exchange traded fund should have the same 500 mutual funds as the S&P 500. This is what makes it an index fund.
Here are the returns of the various options of the Vanguard S&P 500 index.
If you want to follow the index investing approach, you have the choice between the iShares MSCI KLD 400 index and the Vanguard FTSE Social index. The Vanguard FTSE Social Index replicates the FTSE4Good American Social Index.
FTSE stands for The Financial Times Stock Exchange. It is a UK financial organization that specializes in providing index offerings for the global financial markets.
The FTSE4Good US Select Index is a market capitalization weighted index comprised of large and mid capitalization stocks and is selected for certain environmental, social and corporate governance (ESG) criteria.
The index also excludes shares of companies which, as determined by FTSE, fail to comply with labour, human rights, environmental and anti-corruption standards as defined by the principles of the Covenant. United Nations, as well as companies that do not meet two of the following three diversity criteria:
(1) at least one woman on the Board of Directors; (2) diversity policies in place; and (3) diversity management systems in place.
As you can see, although it has the same gender equality ratings, it scores better in the other categories except for deforestation. In this category, it retains the same rating.
These returns are very similar to those of the S&P 500.
the MSCI KLD 400 Social Index is a capitalization-weighted index of 400 US stocks that provides exposure to companies with exceptional environmental, social and governance (ESG) ratings and excludes companies whose products have negative social or environmental impacts.
The index is designed for investors looking for a diversified benchmark of companies with a strong sustainability profile while avoiding companies that are incompatible with value filters.
This index gets an A for gender equality. Can you really retire while investing in the Gender Equality Index?
iShares The version actually has higher returns than the Vanguard S&P 500. This may be due to the A rating for gender equality.
So, can women actually retire successfully and comfortably using index investing?
As I said in my previous article, the short answer is yes! Whether you choose active investing or passive investing, the answer is to calculate how much you will/can spend and then save long enough. I believe in a diversified approach rather than choosing just one type of investment.
I encourage you to either take the time to learn more about risk-adjusted return investing or find a qualified professional who does. Although they don’t have to be a Certified Financial Planner Where Chartered Financial AnalystI think it’s a good start.
If one of these professionals starts telling you that investing in your stocks is not a good idea, you can either show them this resource or find another advisor! Believe it or not, most investment professionals are undereducated in this area.
Others work at companies that don’t allow them access to all of the mutual funds and exchange-traded funds listed by as you sow. Still others are not investment advisor representativeswhich limits their choices depending on the UCITS with share classes I mentioned above.
I think investing in companies that promote gender equality is a necessary step to achieve gender equality. To your retirement powered by gender equality!