It seems everyone has an opinion on everything these days, but investing in a low-cost index fund seems like an almost universally accepted investing strategy. It’s baffling how many investors choose an index without understanding the types of businesses the underlying holdings are engaged in. Indexing isn’t bad, per se, but choosing the index is an active decision. Here are some facts that might surprise you about the constituents of the S&P 500 index[1]:
424 companies are addressing environmental impacts associated with energy consumption.
370 companies are working to ensure that its culture and hiring practices embrace the building of a diverse and inclusive workplace
211 companies guided philanthropy to organizations advocating for the promotion and acceptance of LGBT lifestyle.
10 companies which produce or distribute pornography.
7 companies that produce abortifacient drugs.
11 companies deriving revenue from gambling activities
7 companies whose primary purpose is to generate revenue from the production, distribution, or sale of alcohol
3 companies involved in the cultivation, processing, or distribution of cannabis
You’ll likely see similar numbers in the funds available in your 401(k) plan! You can look up your investments here by simply entering investment names or ticker symbols.
If you look your funds and have trouble sleeping, click the button below and let's discuss it. Aligning your investments with your values is harder than investing in a popular index, but it’s possible.
[1] Source: Inspire Insight, as of June 6, 2022, using SSgA S&P 500 ETF (SPY) as index proxy.