Finance

Betterment Climate Impact ETF

Betterment Climate Impact ETF, Betterment launched its first socially responsible ETF, the Broad Impact portfolio, in 2017. It replaces our exposure to International Developed Bond and US High Quality Bond with a global green bond ETF. This new portfolio does not qualify for Tax Loss Harvesting+, but does invest in fossil fuel reserve free ETFs. The Climate Impact portfolio, however, does qualify for this feature. Ultimately, the investment goals of this portfolio are similar to those of its predecessors.

Broad Impact portfolio is an engagement-based socially responsible ETF

To invest in companies with a social responsibility, betterment launched its Climate Impact Portfolio. This ETF invests in green stocks, fossil-fuel reserve-free ETFs, and global green bonds, as well as engagement-based socially responsible ETFs. In addition to its existing SRI offering, Betterment offers three impact investing options: its Core Portfolio and its Climate Impact Portfolio.

The Betterment Broad Impact portfolio follows the benchmark index of large cap US stocks and invests in those that have a low environmental impact. It also invests in a broad range of US stocks across developed and emerging markets. The Betterment Climate Impact Portfolio is the first ETF to focus on climate change issues. Betterment is committed to helping businesses create sustainable jobs and improve the environment, so its Core portfolio is comprised of largely sustainable and green companies.

It replaces our International Developed Bond and US High Quality Bond exposure by a global green bond ETF

The Betterment Climate Impact Portfolio will replace our exposure to US and International Developed Bonds with a globally-diversified green bond ETF. As we all know, fixed-income investments carry two main risks: interest-rate risk and credit risk. Interest-rate risk refers to the possibility that a bond issuer will default on its debt obligations, leading to a drop in the value of the bond.

To gain exposure to global green bonds, we’ve been buying the global-green Bond ETF, which has a low correlation to the U.S. dollar. This fund provides high-quality long-term returns and reduces our risk by investing in companies that are doing good for the environment. We also bought the ETF to diversify our portfolio and reduce our tax burden.

It does not qualify for Tax Loss Harvesting+ feature

Betterment offers three types of socially responsible investment portfolios. The Broad Impact Portfolio invests in U.S. stocks and ESG funds, reducing your overall capital gains tax. The Socially Responsible Investing (SRI) portfolio invests in ESG funds and other non-taxable investments. Betterment’s tax-loss harvesting feature is triggered when your portfolio strays from your pre-determined asset allocation.

If you are considering Betterment’s services, make sure you read the fine print. First, this feature is only available to accounts worth $50,000 or more. If you have a portfolio worth more than $100,000, you may want to look for a platform with a lower fee. It is also worth mentioning that Betterment does not offer direct indexing. Its TLH+ feature may not be suitable for every portfolio.

It invests in fossil fuel reserve free ETFs

If you’re interested in divesting from fossil fuels, you may want to check out Betterment’s Climate Impact Portfolio, which allocates about 50% of its stock basket to companies with no fossil-fuel reserves. This fund is different from other index funds because it is not as strict as Green Century, but still has a relatively low carbon footprint. The CRBN fund, on the other hand, focuses on recognizing and rewarding the cleanest companies in each industry.

The Betterment Climate Impact Portfolio invests in fossil-fuel-free ETFs, which are considered “green” in the investment community. These investments are screened to ensure that they have the lowest carbon footprints, and have bonds that invest in climate-related projects. The Betterment Climate Impact Portfolio is available in fully divested and low carbon portfolios. Its climate-related bonds are linked to a variety of projects geared toward reducing the impact of climate change.

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