When investors are interested in sustainable investing, many gravitate toward boutique exchange-traded funds. After all, ETFs are more agile and cost-effective than mutual funds, and can offer up some interesting ways to invest — including clean energy ETFs populated with leading companies fighting climate change.
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But while mutual funds may not be quite as tactical as a group, there are a few select investment managers out there worth considering. The following green mutual funds are all well-established options with more than $1 billion in assets, and they all offer straightforward strategies that will lean your portfolio in the direction of sustainability.
After all, if you really want an aggressive and focused play on high-tech firms, then you can always buy individual stocks directly instead of a mutual fund or ETF. But if you want a diversified way to incorporate the fight against climate change into your long-term approach, these green mutual funds are worth a look:
| Mutual fund | Expense Ratio |
| Parnassus Core Equity Fund (ticker: PRBLX) | 0.82% |
| Calvert Equity Fund (CSIEX) | 0.91% |
| Putnam Sustainable Leaders Fund (PNOPX) | 0.92% |
| Amana Growth Fund (AMAGX) | 0.91% |
| Fidelity U.S. Sustainability Index Fund (FITLX) | 0.11% |
| Calvert Small-Cap Fund (CCVAX) | 1.19% |
| Parnassus Mid Cap Fund (PARMX) | 0.96% |
Parnassus Core Equity Fund (PRBLX)
— Assets under management: $30.1 billion
— Expense ratio: 0.82%, or $82 annually on every $10,000 invested
— Minimum investment: $2,000
The Parnassus Core Equity Fund is the leader among green mutual funds when it comes to assets under management. That said, it’s not perfect or particularly flashy. It has a focused portfolio of about 40 stocks, led by Microsoft Corp. (MSFT) and Google parent Alphabet Inc. (GOOGL), and is designed to be a core large-cap fund as much as a green mutual fund. That said, investment manager Parnassus has made a name for itself by linking traditional fundamental analysis with an overlay of environmental, social and governance (ESG) factors to ensure all of its funds take sustainability into account.
PRBLX is well established with the largest asset tally of this group, making it a logical starting place for many investors.
Calvert Equity Fund (CSIEX)
— Assets under management: $6.8 billion
— Expense ratio: 0.91%
— Minimum investment: $1,000
Similar to the prior Parnassus fund, Calvert is an investment adviser that prioritizes ESG in its approach, with a 40-year track record of “responsible” investing that takes into account sustainability and environmental factors, among other criteria. The fund holds about 45 total companies, led by familiar Big Tech names as well as less obvious plays like health care firm Danaher Corp. (DHR). As you can probably guess, the fund is not designed to hold solar stocks or wind turbine manufacturers but rather large-cap domestic stocks that rank highly for their internal programs such as purchasing carbon offsets or building LEED-certified headquarters. Still, if you want to look beyond conventional index funds, then CSIEX is a good green mutual fund to consider.
Putnam Sustainable Leaders Fund (PNOPX)
— Assets under management: $6.6 billion
— Expense ratio: 0.92%
— Minimum investment: None
This Putnam offering is another of the largest and most respected sustainable investing options out there. It’s also a focused fund with less than 60 total stocks led by familiar favorites like Microsoft, Apple Inc. (AAPL) and Amazon.com Inc. (AMZN), as it “invests in companies that have demonstrated leadership in key sustainability issues that are financially material to their business context,” according to official documentation from its manager Franklin Templeton. One notable downside that investors should consider before buying in: There are some high front-end costs associated with PNOPX, which has a maximum initial charge of 5.75%.
[READ: 5 Best Charles Schwab Money Market Funds]
Amana Growth Fund (AMAGX)
— Assets under management: $2.8 billion
— Expense ratio: 0.91%
— Minimum investment: $100
Very accessible with just a $100 minimum investment, this Amana Growth fund from Saturna Capital is incredibly unique in that it bills itself as “halal” — or fitting the religious requirements of Islam. In fact, the word “amana” translates loosely to trust and responsibility. That means you won’t find businesses that focus on alcohol, pornography or gambling. And interestingly enough, you won’t find a penny in finance because strict Islamic law prohibits demanding interest on loans.
The fund’s leading investments include Apple, pharma leader Eli Lilly & Co. (LLY) and Dutch semiconductor company ASML Holding NV (ASML), among others. Though there are only 34 total holdings, the fund is well established with several billion dollars in assets. It also has a growth-oriented approach, which may appeal to some investors.
Fidelity U.S. Sustainability Index Fund (FITLX)
— Assets under management: $4.2 billion
— Expense ratio: 0.11%
— Minimum investment: None
A cost-effective option, FITLX from Fidelity is a sustainability-focused mutual fund that charges just a fraction of what the other funds on this list charge. It is also the most wide-ranging of the green mutual funds so far, with 285 total stocks in its portfolio. That doesn’t mean it’s all that more diversified, however, as it is weighted by size — so mega-cap stocks like Microsoft and Nvidia Corp. (NVDA) dominate the portfolio; in fact, 37% of all assets are in its top 10 positions.
Calvert Small-Cap Fund (CCVAX)
— Assets under management: $2.9 billion
— Expense ratio: 1.19%
— Minimum investment: $1,000
First things first: CCVAX is definitely the most expensive fund on this list from an annual fee perspective. That’s in part because mutual funds generally have higher costs than their exchange-traded cousins, but it’s also because this is a boutique offering with an active approach. Calvert prides itself on its sustainability approach to all its funds, as mentioned previously, but this is a harder-to-manage vehicle as it holds a select list of about 70 companies with an average market capitalization of less than $5 billion. Top stocks include real estate firm Essential Properties Realty Trust Inc. (EPRT) and medical device firm AptarGroup Inc. (ATR).
Parnassus Mid Cap Fund (PARMX)
— Assets under management: $3 billion
— Expense ratio: 0.96%
— Minimum investment: $2,000
Going slightly larger but not as reliant on mega-caps as the first few green mutual funds on this list, investment manager Parnassus offers a middle ground. With a focus on mid-sized corporations and an average market value of about $30 billion, this investment vehicle offers a way to invest sustainably in established firms but not necessarily duplicate positions you might own in a traditional large-cap fund. Top holdings include derivatives exchange operator Cboe Global Markets Inc. (CBOE) and financial software and technology firm Fidelity National Information Services Inc. (FIS).
[SEE: 7 Best Vanguard Funds to Buy and Hold]
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7 Best Green Mutual Funds to Buy Now originally appeared on usnews.com
Update 07/11/24: This story was previously published at an earlier date and has been updated with new information.
