Vote with your wallet? Don’t forget about your portfolio!

I’m sure you’ve heard the phrase “vote with your wallet.” Maybe you’ve put some effort into changing your spending patterns and shifted to intentionally supporting businesses that align with your personal values, but have you taken a look at your investments?

I’m guessing the answer is probably not.

There’s no shame in that. Few people are actively analyzing the contents of their investments. We check into the numbers a few times a year and that’s that. Digging deeper than that makes most people’s eyes glaze over or gives them PTSD flashbacks from math class. As someone who only passed one math test my senior year of high school, I’m very familiar with those feelings. But let’s push past those for now and take a look under the hood of my portfolio.

A few clarifications before we start. I won’t be discussing my actual numbers here, this is just an exploration of the funds I’m invested in across my entire portfolio. I don’t carry any individual stocks (I have in the past though) and while I do have a small amount of bonds, I don’t feel like they are relevant to the conversation so we’ll skip those.

About Invest Your Values

I’ll be using the Invest Your Values platform to help with this analysis. Invest Your Values is a project from As Your Sow, a non-profit focused on “harness[ing] shareholder power to create lasting change and align investments with values.” The Invest Your Values platform ranks 401k plans, mutual funds and EFTs, Target date funds, stocks, and bonds against 7 issues areas:

1. Fossil Fuels: Investments in coal, oil, and natural gas energy and utility companies, and related financial companies

2. Deforestation: Investments in deforestation-risk agricultural commodities, and related financial companies and consumer brands

3. Gender Equality: Gender equality group ranking, based on Equileap company data

4. Civilian Firearms: Investments in civilian firearms manufacturers, and related gun retailers

5. Prison Industrial Complex: Investments in prisons and borders industry, including private prison operators

6. Military Weapons: Investments in military arms manufacturers and services companies, including nuclear weapon manufacturers and servicers

7. Tobacco: Investments in tobacco and e-cigarette manufacturers, and tobacco-promoting entertainment companies

The platform also provides resources for both individuals and company 401k admins who are looking to take action. Considering that 401ks are the most popular kind of retirement accounts for Americans to hold and contain about $12.5 Trillion, it makes sense for us to start looking at the make-up of these plans more closely.

My Funds

Here’s an overview of the 8 funds we’ll be looking at.

• PEJ: Invesco Leisure and Entertainment ETF | Invest Your Values Scores

  • Top Holdings: Sysco Corp, Warner Bros Discovery , DoorDash,

    Hilton Worldwide, Royal Caribbean Cruises, Carnival Corp, United Airlines, Delta Air Lines, Darden Restaurants, Sportradar Group

• VTI: Vanguard Total Stock Market Index Fund | Invest Your Values Scores

  • Top Holdings: Apple, Microsoft, NVIDIA, Amazon, Meta Class A, Alphabet Class A, Broadcom, Berkshire Hathaway Class B, Alphabet Class C, Tesla

• VXUS: Vanguard Total Intl Stock Index Fund | Invest Your Values Scores

  • Top Holdings: Taiwan Semiconductor, Tencent, SAP SE, Alibaba, Novo Nordisk A/S Class B, ASML, Nestle SA, Roche, AstraZeneca, Novartis

• FSKAX: Fidelity Total Market Index Fund | Invest Your Values Scores

  • Top Holdings: Apple, NVIDIA, Microsoft, Amazon, META Class A, Alphabet Class A, Berkshire Hathaway Class B, Broadcom, Alphabet Class C, Tesla

• FXAIX: Fidelity 500 Index Fund | Invest Your Values Scores

  • Top Holdings: Apple, NVIDIA, Microsoft, Amazon, META Class A, Alphabet Class A, Berkshire Hathaway Class B, Broadcom, Alphabet Class C, Tesla

• FZILX: Fidelity ZERO International Index Fund | Invest Your Values Scores

  • Top Holdings: Taiwan Semiconductor, Tencent, ASML, Novo Nordisk A/S Class B, SAP SE, Alibaba, , Nestle SA, AstraZeneca, Roche, Toyota

• FSCSX: Fidelity Select Software and IT Services Portfolio | Invest Your Values Scores

  • Top Holdings: Microsoft, Salesforce, Adobe, Autodesk, Workday, Palo Alto Networks, Intuit, Hubspot, Oracle, Atlassian

• FFOPX: Fidelity Freedom Index 2050 Fund Institutional Premium Class | Invest Your Values Scores

  • Top Holdings:

    • Fidelity Series Total Market Index Fund

      • Apple, NVIDIA, Microsoft, Amazon, META Class A, Alphabet Class A, Berkshire Hathaway Class B, Broadcom, Alphabet Class C, Tesla

    • Fidelity Series Global ex U.S. Index Fund

      • Taiwan Semiconductor, Tencent, ASML, Novo Nordisk A/S Class B, SAP SE, Alibaba, , Nestle SA, AstraZeneca, Roche, HSBC

Scoring and Comparisons

Let's take a look at how my portfolio holds up against the Invest Your Values metrics. As you saw above, Invest Your Values assigned Letter Grades across each of the Issue Areas for each fund. But I was also interested in generating a number score as well as assigning an overall Letter Grade to each fund. To do this, I assigned the following values to each letter: A= 1,

B= .5, C= 0, D= -.5, F= -1. With 8 funds being considered, my portfolio scores could be somewhere between 8 and -8. To get the correct spread I divided 16 (range of scores) by 5 (number of letter grades) which gave me a spread of 3.2 per letter grade. Take a look at the chart below for an easy visual.

My Overall Scores

As you can see from the call outs below, my portfolio doesn’t compare too well against the criteria. The promotion and use of Fossil Fuels and support of the Prison Industrial Complex cut across many of my funds, and everything else is neutral at best. Not exactly aligned with my progressive values.

What did I learn about my investments?

Looking at the call outs below, here’s a few things I’d like to highlight.

1. VTI, FSKAX, and FXAIX are all focused on the total US market which means they are invested in basically all the same companies when it comes to their top holdings: Apple, Microsoft, NVIDIA, Amazon, Facebook, Alphabet, Broadcom, Berkshire Hathaway Inc., and Tesla. That being said, there is a bit of variation in their scores.

   1. FXAIX got a B in Gender Equality.

2. VXUS and FZILX are focused on the total international market (non-US) which means they are invested in basically all the same companies when it comes to their top holdings:Taiwan Semiconductor Manufacturing Co. Ltd., Tencent Holdings Ltd., SAP SE, Alibaba Group Holding Ltd., Novo Nordisk A/S Class B, ASML Holding NV., Nestle SA, Roche Holding AG, and AstraZeneca plc (VXUS does have Novartis AG in its top holdings whereas FZILX rounds its top holdings out with Toyota Motor Group).

   1. Unsurprisingly, these funds get the same exact letter grades across all areas and come out with a D.

3. FFOPX provides basically the same investment mix as the 5 funds listed above but comes out ahead when it comes to scoring. It received an overall score of C, and got a B in Gender Equality.

4. I was shocked to see that FSCSX got a nearly perfect score. That said, there’s more nuance to learn about when it comes to the funds connections with Gender Equality (where gender balance in leadership, compensation, WLB, transparency, and accountability are still big issues) and the Prison Industrial Complex (Microsoft, Salesforce, Alphabet, Accenture, and Capgemini are connected to prisons and border controls).

5. PEJ had a pretty high score as well but got dinged heavily in the Gender Equality (same issues as FSCSX) and Prison Industrial Complex (Aramark is connected to prisons and border controls) categories.

Where to go from here?

Based on this analysis, I could easily throw my hands up in the air. I was told the smart move was to “buy the market” and we’re living in the Good Place, so of course, I have to accept that my retirement planning is based on making money in ways that conflict with my values.

Luckily, I attended a speech by Janine Firpo at EconoMe a few weeks ago. Not only did she teach us about the Invest Your Values platform, she dispelled a lot of misconceptions around ESG (environmental, social and governance) investing. Yes, these funds aren’t perfect, but they make money while funding businesses that aim to have a sustainable and societal impact in the world, which seems like a step in the right direction.

Since I attended Janine’s talk, I’ve started researching some other funds to add into my portfolio as I invest for my future. Here’s a few of them.

• ESG U.S. Stock ETF: Scores

• Fidelity Sustainable US Equity ETF: Scores

• Fidelity U.S. Sustainability Index Fund: Scores

• Fidelity International Sustainability Index Fund: Scores

Thanks for joining on this look under the hood of my investment portfolio. All in all this analysis didn’t take very long (a couple hours on a slow day at work) and there was very little math or financial mambo jumbo involved. I definitely gained some new insight by doing this exercise, and I hope you did too. Let me know your thoughts. What’s the alignment look like between your investment portfolio and your values? What moves are you thinking of making in the future?

My Substack is free but if you feel like buying me a coffee that’d be nice!