Need advice for building a 100% fossil-fuel stock free portfolio

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Topic Author
knockknock
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Need advice for building a 100% fossil-fuel stock free portfolio

Post by knockknock »

Total market funds, that are central to the bogleheads investing strategy, have some portion invested into fossil fuel stocks. For example, VTSAX has a 6% investment in fossil fuels (e.g: ExxonMobil, Chevron, ConocoPhillips, Dominion etc.,). Going forward, I would like to have a portfolio that is 100% free of fossil fuel stocks. I am willing to take on the additional risk I am exposed to by not being invested in the whole market. Any boglehead attempt a completely fossil fuel free portfolio or have advice on building one?

If it helps: I am 28 yrs old and work at a tech megacorp with a salary of 230k with a net worth of 200k.
theorist
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by theorist »

If you’re happy to sign on to other socially conscious causes as well, an ESG fund like this one from Vanguard

https://investor.vanguard.com/etf/profile/ESGV

may serve your purpose.

If you just want to avoid fossil fuels, or have more specific target exclusions than ESG funds that you can find, maybe consider “direct indexing.” It may also have tax loss harvesting benefits anyway. Though it comes with higher expense ratios, and is probably suitable for investors with significant holdings.
knockknock wrote: Mon Nov 23, 2020 6:00 am Total market funds, that are central to the bogleheads investing strategy, have some portion invested into fossil fuel stocks. For example, VTSAX has a 6% investment in fossil fuels (e.g: ExxonMobil, Chevron, ConocoPhillips, Dominion etc.,). Going forward, I would like to have a portfolio that is 100% free of fossil fuel stocks. I am willing to take on the additional risk I am exposed to by not being invested in the whole market. Any boglehead attempt a completely fossil fuel free portfolio or have advice on building one?

If it helps: I am 28 yrs old and work at a tech megacorp with a salary of 230k with a net worth of 200k.
austin757
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by austin757 »

Just curious, but why are you doing this?
Topic Author
knockknock
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by knockknock »

austin757 wrote: Mon Nov 23, 2020 7:00 am Just curious, but why are you doing this?
Trying to be a bit more socially responsible that's all...
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knockknock
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by knockknock »

theorist wrote: Mon Nov 23, 2020 6:51 am If you’re happy to sign on to other socially conscious causes as well, an ESG fund like this one from Vanguard

https://investor.vanguard.com/etf/profile/ESGV

may serve your purpose.

If you just want to avoid fossil fuels, or have more specific target exclusions than ESG funds that you can find, maybe consider “direct indexing.” It may also have tax loss harvesting benefits anyway. Though it comes with higher expense ratios, and is probably suitable for investors with significant holdings.
knockknock wrote: Mon Nov 23, 2020 6:00 am Total market funds, that are central to the bogleheads investing strategy, have some portion invested into fossil fuel stocks. For example, VTSAX has a 6% investment in fossil fuels (e.g: ExxonMobil, Chevron, ConocoPhillips, Dominion etc.,). Going forward, I would like to have a portfolio that is 100% free of fossil fuel stocks. I am willing to take on the additional risk I am exposed to by not being invested in the whole market. Any boglehead attempt a completely fossil fuel free portfolio or have advice on building one?

If it helps: I am 28 yrs old and work at a tech megacorp with a salary of 230k with a net worth of 200k.
Thanks for your reply. What does "direct indexing" mean?
fabis
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by fabis »

Weird. 100% of business rely on fossil fuels.

Be careful out there and don't get swept up into social trends. I understand your plight but don't let marketing get a hold of you.
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knockknock
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by knockknock »

fabis wrote: Mon Nov 23, 2020 7:11 am Weird. 100% of business rely on fossil fuels.

Be careful out there and don't get swept up into social trends. I understand your plight but don't let marketing get a hold of you.
Of course, I understand that the world runs on oil. I just don't want to directly fund fossil fuel companies by investing in them.
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

knockknock wrote: Mon Nov 23, 2020 7:14 am
fabis wrote: Mon Nov 23, 2020 7:11 am Weird. 100% of business rely on fossil fuels.

Be careful out there and don't get swept up into social trends. I understand your plight but don't let marketing get a hold of you.
Of course, I understand that the world runs on oil. I just don't want to directly fund fossil fuel companies by investing in them.
All low cost index funds will be out for sure. What about buying carbon offsets instead? Or giving money to organizations that are active in rainforest reforestation efforts?

Otherwise your two options are: (1) direct stock investing in only companies you feel comfortable with and/or (2) socially managed funds, which will not be low cost and will almost assuredly underperform the indexes after everything is factored in.
fabis
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by fabis »

Why not directly buy a tree farm/ directly invest and use the regenerated timber for your future generations? You would be directly impacting the environment while growing sustainable resources.

Get a few hundred acres in some state you never visit and cut X% of trees per year for profit and then reinvest with newly planted trees on the land you just had cut.

Lumber price keep going up and up.
Veni Vidi Decessi
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Veni Vidi Decessi »

A bit of advice here: look up the number of everyday items that are directly made from the oil industry (hint, it’s most consumer items). Even if you avoid directly investing in them, any company in which you invest is going to, in part, trickle back to an oil company. Even “carbon free” companies like Google still purchase office products, computers, etc that all are created from oil/natural gas. Their employees spend their salaries on oil-based items, etc...

You can certainly lessen your exposure to oil by this method of allocation, but I’m a firm believer that it will do pretty much nothing will be accomplished by people investing “responsibly”. It’s going to take a ground-breaking breakthrough to change the world’s production paradigm.

One option you could look at is investing in companies that have research funded that is aimed to do just that - at least there your money will be put to the use you intend.
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

Veni Vidi Decessi wrote: Mon Nov 23, 2020 7:23 am A bit of advice here: look up the number of everyday items that are directly made from the oil industry (hint, it’s most consumer items). Even if you avoid directly investing in them, any company in which you invest is going to, in part, trickle back to an oil company. Even “carbon free” companies like Google still purchase office products, computers, etc that all are created from oil/natural gas. Their employees spend their salaries on oil-based items, etc...

You can certainly lessen your exposure to oil by this method of allocation, but I’m a firm believer that it will do pretty much nothing will be accomplished by people investing “responsibly”. It’s going to take a ground-breaking breakthrough to change the world’s production paradigm.

One option you could look at is investing in companies that have research funded that is aimed to do just that - at least there your money will be put to the use you intend.
Google is a massive energy user to power and cool its server farms. Even with their solar initiatives, much of the time that’s fossil fuel energy.
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knockknock
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by knockknock »

Veni Vidi Decessi wrote: Mon Nov 23, 2020 7:23 am A bit of advice here: look up the number of everyday items that are directly made from the oil industry (hint, it’s most consumer items). Even if you avoid directly investing in them, any company in which you invest is going to, in part, trickle back to an oil company. Even “carbon free” companies like Google still purchase office products, computers, etc that all are created from oil/natural gas. Their employees spend their salaries on oil-based items, etc...

You can certainly lessen your exposure to oil by this method of allocation, but I’m a firm believer that it will do pretty much nothing will be accomplished by people investing “responsibly”. It’s going to take a ground-breaking breakthrough to change the world’s production paradigm.

One option you could look at is investing in companies that have research funded that is aimed to do just that - at least there your money will be put to the use you intend.
I think there is an appreciable difference between investing directly in fossil fuel companies versus investing in companies that offer services/products derived from energy, part of which, could be from fossil fuels. In the former case, I am directly contributing to and enabling the fossil fuel industry that has vested interests and tries to hinder the world's transition to cleaner energy. In the latter case, although I am still indirectly contributing some amount to the fossil fuel industry, my contributions to that industry will be lessened as companies move away from fossil fuels (some of the large companies, e.g., Apple, are taking major steps in this direction). There are other benefits to the latter approach, e.g., many companies buy carbon offsets to neutralize their carbon output etc.,
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TomatoTomahto
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by TomatoTomahto »

Knockknock, I appreciate the sentiment. We have, in the past 2 years, become net carbon neutral and have only a small use of fossil fuels (the holdout is a small propane generator to back up our solar and batteries). However, we still invest using broad based index funds.

There are some good recommendations upthread. Good on ya.
I get the FI part but not the RE part of FIRE.
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

knockknock wrote: Mon Nov 23, 2020 7:43 am
Veni Vidi Decessi wrote: Mon Nov 23, 2020 7:23 am A bit of advice here: look up the number of everyday items that are directly made from the oil industry (hint, it’s most consumer items). Even if you avoid directly investing in them, any company in which you invest is going to, in part, trickle back to an oil company. Even “carbon free” companies like Google still purchase office products, computers, etc that all are created from oil/natural gas. Their employees spend their salaries on oil-based items, etc...

You can certainly lessen your exposure to oil by this method of allocation, but I’m a firm believer that it will do pretty much nothing will be accomplished by people investing “responsibly”. It’s going to take a ground-breaking breakthrough to change the world’s production paradigm.

One option you could look at is investing in companies that have research funded that is aimed to do just that - at least there your money will be put to the use you intend.
I think there is an appreciable difference between investing directly in fossil fuel companies versus investing in companies that offer services/products derived from energy, part of which, could be from fossil fuels. In the former case, I am directly contributing to and enabling the fossil fuel industry that has vested interests and tries to hinder the world's transition to cleaner energy. In the latter case, although I am still indirectly contributing some amount to the fossil fuel industry, my contributions to that industry will be lessened as companies move away from fossil fuels (some of the large companies, e.g., Apple, are taking major steps in this direction). There are other benefits to the latter approach, e.g., many companies buy carbon offsets to neutralize their carbon output etc.,
I’m not sure your thesis about energy companies is correct. Most major companies these days have the mindset of innovate or die. Most likely the big energy companies will be at the forefront of developing and commercializing future viable non-carbon based energy sources (i.e., ones that are actually profitable on their own merits without government subsidies).
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Jack FFR1846 »

Plastic is made from oil. There's only one car company in the world who doesn't use any plastic. Koenigsegg. Of course, it'll cost you several million dollars for a car and you'll probably have to get on a waiting list for a few years unless you're willing to buy used. I think Miller Motorcars in Stanford, CT has a used one on consignment.

As mentioned, all companies use oil. And many oil companies have diversified into regenerative energy sources.

Finally, your investment in XOM doesn't support XOM in any way. When you buy the stock, you're not buying it from the company, you're buying it from Joe and Daisy down the street who are selling to buy their first house. Why don't you like Joe and Daisy? What did they ever do to you? :?
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STVCT
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by STVCT »

I was just having a similar conversation this weekend w/ my family. They're interested in getting started investing, but are not interested in investing in a lot of companies/industries for the reasons you describe. Additionally, they don't want to invest in companies that made large donations to the political ideologies that oppose theirs. Since most large companies have lobbyists and contribute to both sides of the aisle, this is pretty limiting.

I let them know that their existing 401k is surely invested already in these companies, which didn't seem to help the situation!

Here are a few resources I pointed out to them:

Rick Ferri's "Socially Conscious Core-4" Porfolio: https://core-4.com/esg-core-4-portfolio/ - This limits investment into tobacco, arms manufacturers, and non-sustainable environmental industries, among others. It still contains things like facebook which made large donations to the "other team", which didn't please my family.

I was able to find a REIT that appealed to them - HASI. While not an index, they're making real estate investments in solar and wind farms, this might be more up your alley.

Lastly (and the politics is now out of the bag), I found DEMZ - this is a large-cap index of 50 S&P500 companies who made more than 75% of their donations to the "blue team" - it leans toward an overweight in tech. In any case, it's got a reasonable-ish expense ratio (.45), and at least its an index spread across a handful of industries - I don't think you'll find fossil fuel companies there.


I get not wanting to invest in certain companies or industries, and I even agree with my family on this. Still, having the conversation was frustrating because it's really limiting - they are not interested in buying the whole haystack, and this can diminish your ability to diversify.
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Ramjet
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Ramjet »

When politics crosses over to investing :oops:
wilshuer
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by wilshuer »

Rather than shunning them, it might be good to research how some of the large companies are investing into alternatives. A true transition will require a shift of the traditional fossil fuel companies as well.

Equnior, Shell, BP, Engie are all shifting investment into alternatives and have net-zero timeline goals. Also, much of what these companies do is enabled by tech from Microsoft, Amazon and Google.
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Admiral »

I'm not going to wade into the political discussion or offer my opinions about whether this strategy makes sense logically, but I will say that what you want to achieve is possible, but at the cost of tremendous risk to your portfolio from non-diversification. There's a reason Bhs (and many others) use index funds.

If you plan to invest only in individual stocks or the very few "green" funds that exist, you should be prepared for major volatility and/or the potential loss of all your capital.

If you're unconcerned with risk, then you should invest your money in whatever (green) widgets you want.
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by btax80 »

This might be one of the worst ideas I've ever heard.
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Flyer24 »

Let's be respectful and helpful especially to newcomers on this site. If you have good advice on creating a portfolio as directed by the OP then please offer it. I have already deleted one post that was out of line and disrespectful. Please be considerate and stay focused on investing.
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

Admiral wrote: Mon Nov 23, 2020 8:34 am I'm not going to wade into the political discussion or offer my opinions about whether this strategy makes sense logically, but I will say that what you want to achieve is possible, but at the cost of tremendous risk to your portfolio from non-diversification. There's a reason Bhs (and many others) use index funds.

If you plan to invest only in individual stocks or the very few "green" funds that exist, you should be prepared for major volatility and/or the potential loss of all your capital.

If you're unconcerned with risk, then you should invest your money in whatever (green) widgets you want.
Solyndra comes to mind. My guess is OP is too young to know bout. Really highlights dangers of companies that rely on subsidies.

EDIT: OP, be mindful of companies that rely on subsidies for their business model. The subsidies may stop and render business untenable. And, in my view, subsidies can cause bad business. habits
humblecoder
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by humblecoder »

WIth all due respect to many of the people who have replied, the OP did not ask for opinions about whether not investing in fossil fuel stocks is a good idea. He/she asked HOW to do it. :oops:

OP: IShares has a number of ETF's which excludes certain companies (https://www.ishares.com/us/strategies/s ... -investing). Other investment companies have similar funds as well. They are usually referred to as "ESG" funds, so I would recommend doing a google search using that keyword to get other options.

These funds, however, not only exclude companies that invest in fossil fuels, but those that make money from weapons, tobacco, and other "controversial" industries. You'll have to decide for yourself whether that matters to you or not.
finanzfrau
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by finanzfrau »

There is a good post from Money Moustache about this topic.
Check it on his blog.

[url][https://www.mrmoneymustache.com/2020/08 ... esting/url]

This is a not a political issue, its about our impact on earth.
Wricha
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Wricha »

humblecoder wrote: Mon Nov 23, 2020 9:00 am WIth all due respect to many of the people who have replied, the OP did not ask for opinions about whether not investing in fossil fuel stocks is a good idea. He/she asked HOW to do it. :oops:

OP: IShares has a number of ETF's which excludes certain companies (https://www.ishares.com/us/strategies/s ... -investing). Other investment companies have similar funds as well. They are usually referred to as "ESG" funds, so I would recommend doing a google search using that keyword to get other options.

These funds, however, not only exclude companies that invest in fossil fuels, but those that make money from weapons, tobacco, and other "controversial" industries. You'll have to decide for yourself whether that matters to you or not.
I think people are just pointing out that defining these “green” pristine companies is difficult making the “how” impossible.
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by angelescrest »

Firemenot wrote: Mon Nov 23, 2020 8:53 am
Admiral wrote: Mon Nov 23, 2020 8:34 am I'm not going to wade into the political discussion or offer my opinions about whether this strategy makes sense logically, but I will say that what you want to achieve is possible, but at the cost of tremendous risk to your portfolio from non-diversification. There's a reason Bhs (and many others) use index funds.

If you plan to invest only in individual stocks or the very few "green" funds that exist, you should be prepared for major volatility and/or the potential loss of all your capital.

If you're unconcerned with risk, then you should invest your money in whatever (green) widgets you want.
Solyndra comes to mind. My guess is OP is too young to know bout. Really highlights dangers of companies that rely on subsidies.

EDIT: OP, be mindful of companies that rely on subsidies for their business model. The subsidies may stop and render business untenable. And, in my view, subsidies can cause bad business. habits
This is a fair point, but you are cherry picking an outlier. The trick is determining what constitutes a subsidy. It’s not unique to them—the oil industry certainly has benefitted from different forms of assistance. What one person views as “subsidy” may be another’s “tax break”, or whatever term you want to use.
runninginvestor
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by runninginvestor »

Quick Google search yielded this site. Seems to aggregate and lay out the various funds of major players well. Could be a good starting point.

https://fossilfreefunds.org/families?q=Vanguard
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JoMoney
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by JoMoney »

I would probably use industry/sector funds and leave out the energy and materials sector... or just pick the sectors you're ok with.
A lot of "green" investors did very well in the recent past because they were (perhaps inadvertently) heavily focused in healthcare, real estate, and technology.

FWIW, being "100% fossil-fuel free" would be near impossible if you actually look at how anything actually operates. The Internet isn't run on solar power, packages aren't shipped on horse-back, concrete isn't mixed by hand.
Last edited by JoMoney on Mon Nov 23, 2020 9:27 am, edited 1 time in total.
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Helo80
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Helo80 »

knockknock wrote: Mon Nov 23, 2020 7:05 am
austin757 wrote: Mon Nov 23, 2020 7:00 am Just curious, but why are you doing this?
Trying to be a bit more socially responsible that's all...
How do you live life without plastic? Genuinely curious here...
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

angelescrest wrote: Mon Nov 23, 2020 9:20 am
Firemenot wrote: Mon Nov 23, 2020 8:53 am
Admiral wrote: Mon Nov 23, 2020 8:34 am I'm not going to wade into the political discussion or offer my opinions about whether this strategy makes sense logically, but I will say that what you want to achieve is possible, but at the cost of tremendous risk to your portfolio from non-diversification. There's a reason Bhs (and many others) use index funds.

If you plan to invest only in individual stocks or the very few "green" funds that exist, you should be prepared for major volatility and/or the potential loss of all your capital.

If you're unconcerned with risk, then you should invest your money in whatever (green) widgets you want.
Solyndra comes to mind. My guess is OP is too young to know bout. Really highlights dangers of companies that rely on subsidies.

EDIT: OP, be mindful of companies that rely on subsidies for their business model. The subsidies may stop and render business untenable. And, in my view, subsidies can cause bad business. habits
This is a fair point, but you are cherry picking an outlier. The trick is determining what constitutes a subsidy. It’s not unique to them—the oil industry certainly has benefitted from different forms of assistance. What one person views as “subsidy” may be another’s “tax break”, or whatever term you want to use.
I may be choosing an outlier with respect to overall market, but not the “green” industry. Without specific and targeted subsidies (and that’s the key — not just general business tax code deductions), many of these companies would die because consumers wouldn’t be willing to pay the actual price without the subsidies. Maybe the targeted subsidies won’t go away, but it’s a risk, especially if one is concentrating in those areas by excluding other industries. Anyhow ... this is starting to get off topic for OP so I’ll stop.
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JoMoney
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by JoMoney »

finanzfrau wrote: Mon Nov 23, 2020 9:13 am...
This is a not a political issue, its about our impact on earth.
"our impact" Maybe if you had say "my impact". When you say "our", it's a social issue, and people who want other people to act a certain way is political.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Helo80
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Helo80 »

Firemenot wrote: Mon Nov 23, 2020 9:28 am
angelescrest wrote: Mon Nov 23, 2020 9:20 am
Firemenot wrote: Mon Nov 23, 2020 8:53 am
Admiral wrote: Mon Nov 23, 2020 8:34 am I'm not going to wade into the political discussion or offer my opinions about whether this strategy makes sense logically, but I will say that what you want to achieve is possible, but at the cost of tremendous risk to your portfolio from non-diversification. There's a reason Bhs (and many others) use index funds.

If you plan to invest only in individual stocks or the very few "green" funds that exist, you should be prepared for major volatility and/or the potential loss of all your capital.

If you're unconcerned with risk, then you should invest your money in whatever (green) widgets you want.
Solyndra comes to mind. My guess is OP is too young to know bout. Really highlights dangers of companies that rely on subsidies.

EDIT: OP, be mindful of companies that rely on subsidies for their business model. The subsidies may stop and render business untenable. And, in my view, subsidies can cause bad business. habits
This is a fair point, but you are cherry picking an outlier. The trick is determining what constitutes a subsidy. It’s not unique to them—the oil industry certainly has benefitted from different forms of assistance. What one person views as “subsidy” may be another’s “tax break”, or whatever term you want to use.
I may be choosing an outlier with respect to overall market, but not the “green” industry. Without specific and targeted subsidies (and that’s the key — not just general business tax code deductions), many of these companies would die because consumers wouldn’t be willing to pay the actual price without the subsidies. Maybe the targeted subsidies won’t go away, but it’s a risk, especially if one is concentrating in those areas by excluding other industries. Anyhow ... this is starting to get off topic for OP so I’ll stop.

I miss the days when Tesla plastered the federal tax subsidies all over their website when you configured a new build....
Helo80
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Helo80 »

JoMoney wrote: Mon Nov 23, 2020 9:30 am
finanzfrau wrote: Mon Nov 23, 2020 9:13 am...
This is a not a political issue, its about our impact on earth.
"our impact" Maybe if you had say "my impact". When you say "our", it's a social issue, and people who want other people to act a certain way is political.
One nice thing about this board is that despite some humble bragging in posts, I think people generally live unassuming lives here
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TomatoTomahto
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by TomatoTomahto »

Helo80 wrote: Mon Nov 23, 2020 9:28 am
knockknock wrote: Mon Nov 23, 2020 7:05 am
austin757 wrote: Mon Nov 23, 2020 7:00 am Just curious, but why are you doing this?
Trying to be a bit more socially responsible that's all...
How do you live life without plastic? Genuinely curious here...
One can make a serious dent in how much plastic products one uses, and especially on how much plastic one throws away without recycling. "Reduced" isn't as good as "without," but it's better than making no changes. Don't let perfect be the enemy of good.
I get the FI part but not the RE part of FIRE.
Helo80
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Helo80 »

TomatoTomahto wrote: Mon Nov 23, 2020 9:37 am
Helo80 wrote: Mon Nov 23, 2020 9:28 am
knockknock wrote: Mon Nov 23, 2020 7:05 am
austin757 wrote: Mon Nov 23, 2020 7:00 am Just curious, but why are you doing this?
Trying to be a bit more socially responsible that's all...
How do you live life without plastic? Genuinely curious here...
One can make a serious dent in how much plastic products one uses, and especially on how much plastic one throws away without recycling. "Reduced" isn't as good as "without," but it's better than making no changes. Don't let perfect be the enemy of good.

I completely agree. Though I see a ton of single use stuff in places like NYC and SF
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

Helo80 wrote: Mon Nov 23, 2020 9:38 am
TomatoTomahto wrote: Mon Nov 23, 2020 9:37 am
Helo80 wrote: Mon Nov 23, 2020 9:28 am
knockknock wrote: Mon Nov 23, 2020 7:05 am
austin757 wrote: Mon Nov 23, 2020 7:00 am Just curious, but why are you doing this?
Trying to be a bit more socially responsible that's all...
How do you live life without plastic? Genuinely curious here...
One can make a serious dent in how much plastic products one uses, and especially on how much plastic one throws away without recycling. "Reduced" isn't as good as "without," but it's better than making no changes. Don't let perfect be the enemy of good.

I completely agree. Though I see a ton of single use stuff in places like NYC and SF
Even if you place recyclable plastic in recycling bins, there’s so little demand for it that in many places it just gets land filled anyhow — not so with metal cans.
Flyer24
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Flyer24 »

Once again, this is not a post about a fossil fuel debate. Stay focused on portfolio investments as requested by the OP. Moderator
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TomatoTomahto
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by TomatoTomahto »

JoMoney wrote: Mon Nov 23, 2020 9:30 am
finanzfrau wrote: Mon Nov 23, 2020 9:13 am...
This is a not a political issue, its about our impact on earth.
"our impact" Maybe if you had say "my impact". When you say "our", it's a social issue, and people who want other people to act a certain way is political.
Oh goodness. When you define political this broadly (ie, "people who want other people to act a certain way is political"), then every thread about Roths, and trusts, and recommending Darned Tough socks is political. Shut down the whole web site ferchristsake.
I get the FI part but not the RE part of FIRE.
humblecoder
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by humblecoder »

Wricha wrote: Mon Nov 23, 2020 9:14 am
humblecoder wrote: Mon Nov 23, 2020 9:00 am WIth all due respect to many of the people who have replied, the OP did not ask for opinions about whether not investing in fossil fuel stocks is a good idea. He/she asked HOW to do it. :oops:

OP: IShares has a number of ETF's which excludes certain companies (https://www.ishares.com/us/strategies/s ... -investing). Other investment companies have similar funds as well. They are usually referred to as "ESG" funds, so I would recommend doing a google search using that keyword to get other options.

These funds, however, not only exclude companies that invest in fossil fuels, but those that make money from weapons, tobacco, and other "controversial" industries. You'll have to decide for yourself whether that matters to you or not.
I think people are just pointing out that defining these “green” pristine companies is difficult making the “how” impossible.
The OP poster was very clear what his/her definition was. He/she wants a portfolio that is 100% free of oil company stocks. I don't think there was much ambiguity.
burbank
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by burbank »

It looks like SPYX is an ETF that tracks the S&P 500 but with the oil and gas companies removed. This might be the closest to a Bogleheads solution available. Of course, it probably still contains companies like the airlines, whose business is literally fueled by oil.
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Watty
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Watty »

knockknock wrote: Mon Nov 23, 2020 6:00 am For example, VTSAX has a 6% investment in fossil fuels ......
One approach is to invest in index fund that includes the stocks you do not want to support but then to dedicate a percentage of your portfolio in companies that offset this with clean energy like wind and solar so that combined your net portfolio is positive towards the goals that you want to support.

Another approach would be to give 6% of your portfolio earnings to a charity that supports clean energy. I could be mistaken but I vaguely remember people posting about doing this when they had strict religious restrictions on how they could invest.

Either of these would also help you get around the problem of defining just what a "fossil fuel" company is since that could also include companies like car companies that sell fossil fuel cars or use lots of fossil fuels like the Amazon delivery trucks. That could also be seen as helping to offset the fossil fuels that you directly or indirectly use.
Last edited by Watty on Mon Nov 23, 2020 10:37 am, edited 2 times in total.
Cwise
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Cwise »

The move away from fossil fuels will be a long one. Definitely won't happen in your lifetime. But it does start with us. Invest in solar.
cadreamer2015
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by cadreamer2015 »

Of course, I understand that the world runs on oil. I just don't want to directly fund fossil fuel companies by investing in them.
As long as fossil fuel companies are not selling additional stock to the public (I don't think this is at all common these days), you will not be directly funding fossil fuel companies by buying their stock in an index fund like Vanguard's Total Market Index. You will be buying shares of fossil fuel companies from other people who want to sell them. I don't see how buying a share of a fossil fuel company from your neighbor down the street or a pension fund in Austria directly funds a fossil fuel company.

BTW I have this same problem with the divestment drive that many students and faculty at colleges and universities have to pressure their endowment managers. If people sell enough stock in fossil fuel companies to depress the stock price, I'm sure there are enough investors operating with fewer moral or philosophical constraints somewhere in the world to buy the stock because it is a good financial investment at a lower price.

I do think you can make the case that fossil fuel companies profit potential is limited as the world moves away from fossil fuels. But that is picking winners, which is not favored by Bogleheads.
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nimo956
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by nimo956 »

Vanguard has low cost sector ETFs, which I would weight to try to recreate the total market excluding energy companies.

Communication Services- VOX
Consumer Discretionary- VCR
Consumer Staples- VDC
Financials- VFH
Health Care- VHT
Industrials- VIS
Information Technology- VGT
Real Estate- VNQ
Utilities- VPU

Exclude:
Energy- VDE
Materials- VAW
50% VTI / 50% VXUS
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

One more thought. Perhaps you could just buy low cost sector index ETFs in their relative percentages to the overall market and just exclude the energy sector ETF. That would seem to accomplish your goals of avoiding direct investment, while still keeping costs low and avoiding added costs of active management funds.
Firemenot
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Firemenot »

nimo956 wrote: Mon Nov 23, 2020 10:54 am Vanguard has low cost sector ETFs, which I would weight to try to recreate the total market excluding energy companies.

Communication Services- VOX
Consumer Discretionary- VCR
Consumer Staples- VDC
Financials- VFH
Health Care- VHT
Industrials- VIS
Information Technology- VGT
Real Estate- VNQ
Utilities- VPU

Exclude:
Energy- VDE
Materials- VAW
You beat me! I was typing message at same time
Outer Marker
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by Outer Marker »

knockknock wrote: Mon Nov 23, 2020 7:43 am I think there is an appreciable difference between investing directly in fossil fuel companies versus investing in companies that offer services/products derived from energy, part of which, could be from fossil fuels. In the former case, I am directly contributing to and enabling the fossil fuel industry that has vested interests and tries to hinder the world's transition to cleaner energy.
I would respectfully suggest that by avoiding investing today's leading energy companies, you may be hindering the development of alternative energy sources. For example:

"BP PLC has unveiled the most aggressive plans yet by a major oil company to pivot toward cleaner energy. But the revamp has so far failed to ignite enthusiasm among investors despite growing interest in renewables. The British energy giant’s strategy—the biggest overhaul in its 111-year history—calls for a 40% reduction in oil-and-gas production over the coming decade, greater investment in low-carbon energy and a ramp-up in wind and solar power. No other major oil company has targeted such a steep decline in their main source of profit." https://www.wsj.com/articles/bp-bets-fu ... 1601402304

BP took a major publicity hit and faced boycotts after the Gulf oil spill. They seem to be making up for it.
theorist
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by theorist »

knockknock wrote: Mon Nov 23, 2020 7:06 am
theorist wrote: Mon Nov 23, 2020 6:51 am If you’re happy to sign on to other socially conscious causes as well, an ESG fund like this one from Vanguard

https://investor.vanguard.com/etf/profile/ESGV

may serve your purpose.

If you just want to avoid fossil fuels, or have more specific target exclusions than ESG funds that you can find, maybe consider “direct indexing.” It may also have tax loss harvesting benefits anyway. Though it comes with higher expense ratios, and is probably suitable for investors with significant holdings.
knockknock wrote: Mon Nov 23, 2020 6:00 am Total market funds, that are central to the bogleheads investing strategy, have some portion invested into fossil fuel stocks. For example, VTSAX has a 6% investment in fossil fuels (e.g: ExxonMobil, Chevron, ConocoPhillips, Dominion etc.,). Going forward, I would like to have a portfolio that is 100% free of fossil fuel stocks. I am willing to take on the additional risk I am exposed to by not being invested in the whole market. Any boglehead attempt a completely fossil fuel free portfolio or have advice on building one?

If it helps: I am 28 yrs old and work at a tech megacorp with a salary of 230k with a net worth of 200k.
Thanks for your reply. What does "direct indexing" mean?

Direct indexing is when the individual securities — or enough to faithfully reproduce whatever you’re trying to track — are directly purchased, maybe in fractional shares, in your account. The correct ratio is purchased to represent the index you’re tracking. Then, it is easy to individually taylor the portfolio to include whatever restrictions the investor wants. E.g. S&P 500 but no tobacco, oil, or technology, to pick a random example.

A big reason people consider this is that — on top of designer exclusions as above — it allows for some efficiencies with tax loss harvesting. So over some period, it allows for potential gains over a normal index fund. Of course it is much more laborious, involves trading, and so forth, so the extra costs may reduce any potential gains.

A recent podcast about this is here:

https://theirrelevantinvestor.com/2020/ ... -indexing/

For transparency, I can say that I do NOT direct index myself :-).
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by pkcrafter »

When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
luckyducky99
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Re: Need advice for building a 100% fossil-fuel stock free portfolio

Post by luckyducky99 »

Check out SPXE -- https://www.proshares.com/funds/spxe.html -- it may get you most of the way there.
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