We believe that investing your money via exchange-traded funds (ETFs) is vastly superior to single stock selection as there are many benefits to this approach. We won't deny that there are also downsides, but we have solutions for them.
Grünfin portfolios are exposed to many large, global companies ranking highly in sustainability matters. Because let’s get real. To save the planet, all industries and the world’s largest companies must step up as part of the solution. In addition, we must create opportunities to directly engage with these companies for them to do even more regarding climate change, workforce conditions and public health. That’s our activist approach.
The ETFs we use have many benefits:
✅ Diversification.
You obtain significant diversification even with small investment amounts. For example, with as little as €10 you get to invest in over 3.400 different underlying stocks and bonds through some of Grünfin’s portfolios. To buy this many positions on your own, you would likely require an overall portfolio size in the millions of euros. Diversification is key in reducing overall portfolio risk.
✅ Low fees.
Imagine the trading fees your bank would charge if you bought 3.400 positions! The fees would surely sum up to thousands of euros. Whereas in the case of our ETFs, the average annualized cost is 0.23% of the amount you invest.
✅ No dividends so no taxable event.
At Grünfin we only invest in ETFs that don’t distribute dividends. You still get dividends credited, but they are automatically reinvested inside the ETF. Meaning your capital grows and no tax is triggered.
✅ Passive beats active.
ETFs passively track an index, whereas stock selection is actively deciding what to buy and sell. Turns out active funds are really bad at selecting stocks. Only 6% of US active funds outperformed their passive index over the last 20 years.
✅ Liquidity.
ETFs can be purchased or sold on a stock exchange the same way that a regular stock can with immediate liquidity.
Of course, investing via ETFs also has downsides:
🙅 No voting rights for us. The ETF manager owns the voting rights to each of the underlying stocks in the index. Meaning we can’t actively vote to push companies toward positive change.
🙅 Constrained to index. As the ETF manager passively follows an index, we cannot decide which stocks to buy or sell. Meaning if there’s a stock we don’t like inside the ETF/index, Grünfin is unable to sell it.
So how do we take an activist approach if we can’t vote or sell? Fortunately, we have solutions.
Solutions for no voting rights for us:
🌱 We joined forces with ShareAction, a UK non-profit that leads investor coalitions with assets in the trillions to engage with and collectively back calls on companies to act on climate change, workforce conditions and public health.
🌱 Our ShareAction coalitions submit proposals for shareholders of the world’s largest companies to vote on the matters you care about.
🌱 We meet with the senior management of the world’s largest companies to push for positive change.
🌱 We engage with our ETF managers so they vote in favor of proposals important to you.
🌱 We sign investor statements urging companies to act on positive change.
Solutions for being constrained to index:
🌱 We meet with the senior management of the world’s largest companies to push for positive change.
🌱 We engage with ShareAction to recommend proposals.
🌱 We engage with index creators to discuss eliminating a stock we don’t like.
We believe activism can lead to positive change by encouraging large, global companies to act. Your money is your vote.
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