Ethical investing apps are gaining popularity among investors who want their money aligned with their values. These apps allow you to screen investments based on environmental, social, and governance (ESG) criteria and create customized portfolios that reflect your priorities. With ethical investing apps, investors have an easy way to put their money to work supporting companies that are making a positive difference in areas like clean energy, sustainable supply chains, diversity and inclusion, and more.
Core issues that ethical investing apps help address include lack of transparency around how retirement funds and other investments are allocated and lack of options for investors to align portfolios with their values. By leveraging technology and big data, these apps enable investors to seamlessly integrate ESG factors into investment decisions. Key functions of ethical investing apps include screens to filter out companies in industries like fossil fuels and weapons production, ratings systems to compare companies on ESG criteria, and tools to build and manage values-based portfolios.
Ethical investing apps enable customized screening based on investor values
A key benefit of ethical investing apps is the ability to screen potential investments based on customized environmental, social, and governance criteria. Apps may provide pre-built screens that allow you to avoid investing in the fossil fuel industry, weapons manufacturing, tobacco, and more. Many apps also let you create custom screens to align with your specific priorities around issues like gender diversity, human rights, climate change solutions, and other areas.
For example, you could set screens to only invest in companies with strong workplace gender diversity policies or companies with science-based greenhouse gas reduction targets. The customization and flexibility of screens is a major advantage of ethical investing apps over traditional socially responsible mutual funds.
Apps simplify building and managing values-based portfolios
Once screening criteria are set, ethical investing apps leverage algorithms and technology to automatically select and weight companies in a portfolio to match an investor’s priorities. This eliminates the manual work of analyzing individual stocks and bonds on ESG factors.
Apps also provide tools for ongoing portfolio monitoring, tracking, rebalancing, and optimization based on ever-evolving ESG data. This enables an investor to take a hands-off approach after the initial portfolio construction while ensuring their money continues being allocated to companies making positive impact over time.
Lower barriers to entry increase access to values-based investing
Many traditional socially responsible mutual funds have high investment minimums that limit access for smaller retail investors. However, ethical investing apps significantly reduce barriers to entry by not requiring minimum investments to open accounts. Automatic rebalancing and portfolio construction also minimize the need for financial expertise.
This democratization effect has opened up ethical investing to a much wider segment of the population. Millennials and women investors especially have shown strong demand for aligning investments with their values, which apps are helping enable.
In summary, ethical investing apps are transforming values-based investing by empowering investors through easy-to-use technology to customize and manage portfolios reflecting their ESG priorities. Democratized access, customized screening capabilities, and seamless portfolio construction and management are key value drivers offered by these apps.