Ethical Investing Stocks and Funds for Your 2021 Portfolio

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Apr. 22 2021, Updated 12:12 p.m. ET

Ethical investing does not come in a single shape. Investors can mold their portfolios based on their own preferences, from socially responsible companies to brands making an environmental impact. In 2021, more ethical investing options are available than ever before.

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These ethical companies and funds are making a statement for animals, the environment, and people seeking social justice. 

Ethical stocks and funds that are ESG-compliant

Environmental, social, and governance (ESG) scores consider 10 factors. Some of them are emissions, shareholder rights, and human rights. Different score providers will give different scores, but the root idea is that a stock adheres to these considerations while retaining current or potential portability.

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Recently, BlackRock (NYSE: BLK) released two new ESG-compliant ETFs. There's the U.S. Carbon Readiness ETF (LCTU) and a global variant (LCTD). They've only been on the public market for two weeks, but valuations are already increasing. Since debuting, LCTU and LCTD shares are up a healthy 1.81 percent and 1.33 percent, respectively.

An unlikely member of the sector is Equinor Energy (NYSE:EQNR). Based in Norway, they may be in the petroleum game, but they're actively pursuing a shift to off-shore wind. This will help them stay compliant within their heavily regulated home country. Equinor shares are up 15.65 percent YTD. 

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Some stocks that are performing extremely well this year include FuelCell Energy (NASDAQ:FCEL), General Electric (NYSE:GE), and United Natural Foods (NYSE:UNFI). In particular, UNFI is up 106.3 percent in Q1.

A focus on socially responsible investments

Social justice issues are of crucial concern for many retail investors. Shawn Carter's (aka JAY-Z) own The Parent Company Holding Corp. (OTC:GRAMF) is one to keep an eye on as it eyes reverse mergers. TCPO focuses on Black-owned cannabis companies. TCPO doesn't look like a buy quite yet, but it's potential is searing. U.S. cannabis companies must list on the OTC markets based on federal illegalities, but that doesn't make them any less legitimate.

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The PAX Ellevate Global Women's Leadership Fund (PXWEX) has been around since 1993 and currently holds more than $822 million in assets under management. The fund prioritizes companies with gender-diverse teams and policies. This is a long-term win, with shares up 61.81 percent in the last five years. 

Impact investing with ethics in mind

Impact investing focuses on the future. Oftentimes, these funds and stocks require upfront capital for long-term testing and development.

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For example, Oatly will soon be listing on the Nasdaq Exchange under the ticker symbol "OTLY." For environmental activists, this non-dairy milk option is good for animals as well as good for the environment (oats require much less water than almonds). It's a good idea to hold off until the period of IPO volatility is over, unless you're invested in a diversified fund like the Renaissance IPO ETF (IPO).

Even the ARK Genomic Revolution ETF (ARKG) is impactful as it directly serves to benefit scientific discovery and medical treatment to help individuals with rare and life-threatening conditions. Much of that fund is clinical, so upfront funding is necessary.

The Invesco Solar ETF (TAN) is in a period of volatility, which makes it a good time to buy in for long-term investors. Existing investors may also want to use this time to average down their cost basis for improved returns. 

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