Socially Responsible Investing: iShares MSCI KLD 400 Social
For investors looking for an easy way to add a dash of socially responsible investing to their portfolio, the iShares MSCI KLD 400 Social (DSI) should be their first stop.
The ETF’s underlying index tracks 99% of all the stocks in the United States. That includes large- mid- and small-cap firms. First, index provider MSCI kicks out all tobacco, gambling, firearms/weapons, nuclear power, adult entertainment and GMO seed producers in the USA Investable Market Index. It then uses various socially responsible investing screens to weight DSI’s holdings and create its underlying portfolio.
The SRI ETF currently tracks 400 different firms and charges just 0.50% — or $50 per $10,000 — in expenses.
And while the removal of those various “sin” industries may at first blush seem like a drag on DSI’s performance, it has actually been the opposite. The socially responsible investment managed to post a 35.5% return in 2013 — besting the venerable S&P 500. Over the last five years, that outperformance has continued.
Overall, DSI proves that investors looking at socially responsible investing don’t have to sacrifice returns for their morals.