Building a Long-Only Portfolio from ESG ETFs

Summary

The document describes replacing the funds in an example long-only portfolio of UK-listed ETFs with ESG-labelled alternatives. Fund selection follows the earlier portfolio’s practical preferences for low ongoing charges, adequate assets under management, and, where possible, distributing share classes. Because the ESG fund range is less comprehensive in some categories, the author relaxes those preferences and adds a category for bonds issued by multilateral institutions.

ESG eligibility is determined with a screening checkbox on a fund comparison site; the author does not assess the quality or consistency of individual funds’ ESG methodologies. One fund is excluded as too weak under that screen, and the text acknowledges that suitable funds could not be found for some categories. The reported comparison is that the matched average ongoing charge is almost unchanged at 0.23%, one basis point higher than before. This is not a performance analysis or a detailed sustainability assessment, and the fee comparison may be affected by changes in fund costs or availability since the original portfolio was assembled.

Key ideas

• The author replaces the holdings of an example UK-listed ETF portfolio with funds that pass a basic ESG screen.
• Fund selection considers ongoing charges, fund size, and distributing share classes, with flexibility where choices are limited.
• Some portfolio categories lack a suitable ESG fund, and a multilateral bond category is added.
• The matched average ongoing charge is reported as 0.23%, one basis point above the prior portfolio.
• The screen does not evaluate the depth or consistency of funds’ ESG practices.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.