Build a good Portfolio climate

2) I choose the best performing mutual funds.

Invest only in sustainable mutual funds and ETFs

European regulations distinguish 3 types of financial products (S.F.D.R. transparency regulations) :

  • so-called Article 6 funds, where the manager considers the sustainability component to be insignificant ;
  • so-called Article 8 funds, where the manager takes certain sustainability aspects into account, and which contain a proportion of sustainable investments
  • so-called Article 9 funds, where the manager pursues stated sustainability goals and therefore contain only sustainable investments.

For your Portfolio climate, we recommend :

  • To invest exclusively in S.F.D.R. art. 8 and 9 funds
  • To choose funds on the Positive Finance platform that have an Environmental "E" rating of at least 3 out of 5 stars

Define your exclusion policy

Go to our EXPLORE section and check out the section on exclusions related to fossil fuels and environmental damage.
You will find a list of mutual funds that closely monitor these controversial areas.

You might also add monitoring on human rights, tobacco, or controversial weapons-in all, there are 30 controversial economic sectors being analyzed by fund managers.

For your Portfolio climate, we recommend :

  • to monitor exposure to fossil fuels, but not to nuclear power, which is, from the standpoint of CO2 emissions, one of the cleanest.
  • to use the criterion of exclusions flexibly : a fund that does not monitor a particular business sector will not necessarily take material positions.

Put in Portfolio both specialized and generalist funds

Specialized funds are available in the market that invest in the following business sectors or themes :

  • Climate and the Environment
  • Water
  • Alternative energies
  • The circular economy
  • the green bonds

You will also find many sustainable funds that have made climate action the linchpin of their sustainability, and that also seek social and good governance goals. You will recognize these funds because they have very high grades in all areas E, S, G.

We recommend that you invest between 25 and 75 percent in specialized funds, and the rest in generalist funds.

Always check the ESGAP of funds on Positive Finance

ESGAP (ESG adjusted performance) calculates both the financial performance, financial risk quality, and sustainability management quality of funds.

Our indicator is calculated daily and contains 2/3 financial measures and 1/3 sustainability assessments.

It is a good tool for validating your choices, because you may come across funds that are excellent from a sustainability standpoint but have not had equally good financial returns.

For your Portfolio climate, we suggest you favor mutual funds and ETFs that have an ESGAP rating of 4 or 5 stars.

In this way, you will get great financial quality combined with excellent sustainability qualities.

Remember : ESGAP changes over time, you will then need to monitor the status of your Portfolio regularly (at least once every quarter).