The Australian superannuation industry could be set for one of its biggest shake-ups in decades. That's what the entry of the massive fund management company Vanguard into the super sector could mean. Vanguard is one of the largest asset managers in the world.  

Many ASX investors would be familiar with some of Vanguard's popular exchange-traded funds (ETFs). Indeed, the Vanguard Australian Shares Index ETF (ASX: VAS) remains the most popular ASX ETF on our share market today.

But until now, Vanguard has not been directly involved in the Australian superannuation industry. Until a few years ago, the company did offer its products indirectly through other super providers. But the company has ditched these avenues in preparation for its entry into the market itself.   

Vanguard primed to announce new superannuation products

This may have just gotten one step closer too. According to reporting in The Australian today, Vanguard has just received regulatory approval to "launch a suite of superannuation products" in the Australian market from the Australian Prudential Regulation Authority (APRA).

Vanguard's Australian chief executive, Daniel Shrimski, told The Australian that "our journey is just beginning… We think the simplicity, the low cost and the (investment) expertise that we will provide will resonate".

As a well-known provider of ETFs, many investors might assume that these ETFs may play a major role in what Vanguard will offer super customers.  

That would be a safe assumption, according to Shrimski. He said that Vanguard's products will be "more fund-based but we think ETFs will certainly be a part of the longer-term solution".

So what ETFs might Aussies be able to invest in under a Vanguard superannuation product? Well, the Vanguard Australian shares ETF would be a good start.

As Vanguard's most popular product, and the only one that covers either the S&P/ASX 200 Index (ASX: XJO) or the S&P/ASX 300 Index (ASX: XKO), it would be a safe bet that VAS is among the flagship ETFs that Vanguard will offer up.

Which Vanguard ETFs could be on offer?

But the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) would be another strong candidate. VSO covers around 210 of the smaller shares on the ASX.

Forget BHP Group Ltd (ASX: BHP) and the big four banks. VSO's largest holdings include companies like Lynas Rare Earths Ltd (ASX: LYC), Carsales.com Ltd (ASX: CAR) and Bendigo and Adelaide Bank Ltd (ASX: BEN).  

That could complement Vanguard's other ASX offer, the Vanguard MSCI Australian Large Companies Index ETF (ASX: VLC) nicely. VLC is an ETF that covers only the top 20 largest companies on the ASX.

Income investors might appreciate the inclusion of the Vanguard Australian Shares High Yield ETF (ASX: VHY).

But Vanguard has many other ETFs that look to shares beyond our shores.

The Vanguard MSCI International Shares Index ETF (ASX: VGS) is another probable shoo-in. This is Vanguard's flagship international shares ETF. VGS covers almost 1,500 individual shares hailing from more than 20 different advanced economies.   

These include Canada, France, Japan, the United Kingdom and Germany. Saying that, it is heavily dominated by US tech giants like Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Amazon.com Inc (NASDAQ: AMZN).

Looking outside the ASX and the US

But we could also see the Vanguard FTSE All-World ex-US ETF (ASX: VEU) offered as well. This fund is similar to VGS, but excludes US shares. In their place, many emerging economies are represented, including India, Brazil, and Saudi Arabia. Overall, this ETF has more than 3,500 individuals holding within it.  

Ethically-minded investors might appreciate if there was the option to select the Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG).

More regionally specific ETFs from Vanguard are also possibilities for inclusion in its superannuation offerings. This includes the Vanguard FTSE Europe Shares ETF (ASX: VEQ), the Vanguard FTSE Asia ex-Japan Index ETF (ASX: VAE) and the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE).

Other Vanguard ETFs covering different asset classes outside shares could also be potentially available. These might be the Vanguard Global Infrastructure Index ETF (ASX: VBLD). As well as the Vanguard Australian Fixed Interest Index ETF (ASX: VAF) for access to fixed-interest bond investments.  

So it's likely that new Vanguard super customers will have a plethora of ETFs to choose from when the company eventually brings its new superannuation products online. We don't yet know when this will be. But with Vanguard now gaining regulatory approval, it's probably going to be sooner rather than later.  

The post Could these ASX ETFs soon play a bigger role in Aussie super funds? appeared first on The Motley Fool Australia.

Commodity markets are booming in 2022 amid a wave of catalysts. Turns out, that's been equally as harsh for ESG and ethically focused share baskets.

As a sector – which is still poorly defined on Australian public markets, mind you – renewables have lagged other segments such as financials, utilities and materials this year.

How can we tell? Whilst there's no specific ASX renewables index, EFTs tracking the segment have crept downwards this year, as is shown further below.

Evidently, as markets have endured volatility in 2022, that's translated to a fairly strong headwind for ASX renewables shares, and at the end of the day, the sector is in the red in 2022.

Nonetheless, scaling back to the start of the year, some names have absorbed losses better than others. Let's take a look at those.

'Green' shares aren't in the green

Unfortunately, on an individual stock level, what we define as a 'renewables' share is quite narrow. Actually, there are no real winners per se, but some shares absorbed selling pressures better than others.

Let's talk in terms of energy first and, with that, results aren't good.

Renewables investor Infratil Ltd (ASX: IFT) is down 2.45% year to date but has whipsawed higher over the past three months. Although, its price chart looks like a 9.0 scale reading on the Richter scale.

Meanwhile, Genesis Energy Ltd (ASX: GNE), owner of a diverse portfolio of thermal and renewable generation assets located in different parts of New Zealand, has slipped 3.3%.

Trends are similar across the board and it appears any capital that's left the sector has been shipped straight across to the adjacent resources, traditional energy, and wider commodities segments.

Alas, it's no better for the exchange-traded funds (ETFs), with the Vanguard Ethically Conscious International Shares INDEX ETF (ASX: VESG) creeping down by 13%.

Meantime, the VanEck MSCI Australian Sustainable Equity ETF (ASX: GRNV) has fallen by more than 5% and is in a similar vein to the product above.

Finally, the Russell Investments Australian Responsible Investment ETF (ASX: RARI) has crept up hard in 2022 and is 4 basis points higher in that time.

It's important to zoom out

Longer term – since last January to be specific – the picture's a bit different. Three of the four securities have remained buoyant over that time, albeit Genesis Energy, which slipped more than 21% into the red.

The VESG ETF seems to have outperformed this bunch and was the star player until volatility crept in this year and it has since consolidated returns.

It has now levelled off and is rangebound alongside the fellow MSCI Australian Sustainability ETF from VanEck.

That's something to think about.

The post Here are the best ASX renewables shares of the year so far appeared first on The Motley Fool Australia.

A new landmark report by the Intergovernmental Panel on Climate Change (IPCC) was released earlier this week. It provided a stark warning about the impacts of human industrialisation on the global climate.

The IPCC report found human activity could likely lead to a 1.5-degree Celsius increase in global average temperatures above pre-industrial levels within just the next two decades.

The report also warned that opportunities to reverse the warming trend were rapidly diminishing, and governments needed to do more to reach net-zero carbon emissions sooner.

This all makes for some pretty sobering reading. But it may also prompt you to reflect a little more deeply about the types of companies you are invested in. Perhaps it's time to really think about how much the companies that make up your portfolio are contributing to a greener, more sustainable future.

And it's not only so that you can sleep better at night – it might even boost your returns, too. As governments create further economic incentives for companies to become more environmentally friendly, forward-thinking "greener" companies may actually be the ones most likely to succeed and become profitable.

So, let's say you do want to shift some of your investments into more climate-friendly companies. It can be pretty difficult to know where to start. Luckily, there are plenty of exchange-traded funds (ETFs) currently trading on the ASX that offer easy access to a diversified basket of ethically conscious companies.

ETFs trade on the ASX just like ordinary shares, but they actually pool together money from a group of small investors and use that cash to purchase shares in a range of companies, based on a specified investment mandate.

While there are quite a few options available on the ASX, here are three ETF ideas to consider.    

Betashares Global Sustainability Leaders ETF (ASX:ETHI)

With more than $1.76 billion in net assets, the Betashares Global Sustainability Leaders ETF is easily the largest fund on this list. The fund only invests in international (non-Australian) companies that pass its strict ethical screening process, and it prefers companies that are proven "climate leaders".

The fund invests globally, although close to 70% of its holdings are in the US, according to its June 2021 fact sheet, with smaller allocations going to Japan and the Netherlands.

ETFS Battery Tech & Lithium ETF (ASX:ACDC)

This battery and lithium fund – which trades on the ASX with the appropriate ticker ACDC – is the smallest fund on this list with just over $300 million in net assets to its name. This might interest shareholders wishing to gain exposure to the developing trend in electronic vehicles.

The fund aims to replicate the performance of the Solactive Battery Value-Chain Index, which includes companies involved in the mining and refinement of lithium and associated products used in energy storage. The fund's largest holding is currently Australian lithium miner Pilbara Minerals Ltd (ASX:PLS).

Vanguard Ethically Conscious International Shares Index ETF (ASX:VESG)

The last fund on the list is this ethically conscious option from Vanguard. It offers investors access to some of the world's largest companies – think Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) – but screens out any companies involved in fossil fuels, nuclear power, gambling, and a range of other unsavoury enterprises.

The fund tracks the FTSE Developed ex Australia Choice Index (formerly the FTSE Developed ex Australia ex Non-Renewable Energy, Vice Products and Weapons Index). It has delivered the best year-to-date returns of the funds included on this list – up more than 20% so far in 2021.

The post 3 ASX ETFs that invest in companies fighting climate change appeared first on The Motley Fool Australia.

Ethical investing. It's an interesting concept, but is it achievable?

Every person is different and what we deem to be 'ethical' may vary. However there are some common themes in the investing world that are deemed 'unethical'.

What is deemed 'unethical'?

Generally speaking, unethical investments could be deemed as ones that involve some or all of the following categories:

• Fossil fuels such as oil and gas
• Gambling
• Alcohol
• Tobacco
• Nuclear power
• Civil or military weapons
• Adult entertainment
• Anything that destroys the environment
• Animal cruelty

That's a big list! 

I would argue that most people are good people. Just because you hold an investment in one of these sectors, this doesn't mean your moral compass is broken. Personally, I buy companies in some of these categories and don't have too much of an issue with it. Of course, I still consider myself a good person. It's really a question of what is good for you personally. If you're generally interested in ETFs, but not too concerned about ensuring all your money goes towards ethical investments, then check out this list of top ETFs.

Some people, however, simply can't live with themselves knowing they have financially contributed to what they consider unethical practices, even if it's indirectly. If you are one of those people, I have good news for you. There are a number of exchange-traded funds (ETFs) that have you covered. The managers of these funds have set up specific criteria to select companies that avoid 'unethical' categories.

Here are some options for ethical investing:

VanEck Vectors MSCI Australian Sustainable Equity ETF (ASX: GRNV)

This ETF is designed to give investors access to a range of Australian sustainable companies.

Materials is the largest sector holding here, weighing in at 22.7%, with financials coming in second at 18.5%.

According to VanEck, this ETF holds companies that have a high level of environmental and social governance (ESG) and relies on the following guiding principles:

• It excludes companies that own any fossil fuel reserves or derive revenue from mining thermal coal or from oil and gas related activities.
• It excludes companies with business activities that are not socially responsible investments (SRI).
• It targets companies with high ESG ratings.

The fees are low at 0.35% per year. Performance wise, the fund is actually down around 9% since inception. On a positive note, it has performed well since the March crash, rising more than 35% in the last 6 months. Dividend returns are quarterly and currently sit at around 4% to 5% return. Detailed information can be found here.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This ETF holds global companies that have been identified as 'climate leaders'. 

The largest sector holding is information technology, sitting at around 38%.

Using the fund manager's methodology, we can see themes such as these ones governing the ethical investing inclusion process:

• It excludes those companies involved in firearms, environmental destruction or animal cruelty.
• It excludes companies with fines or convictions and those with human rights concerns.
• These climate change leaders must have a carbon impact of at least 60% less than their industry average.

One thing to note here is that the fees are a little high, being 0.59% per year. Although, personally, I don't think this is too bad. Fund performance is up more than 60% since inception. Over the last 6 months, it has returned around 15% to investors. Dividend returns are 6 monthly and have been as high as 12.80% recently according to the provider's performance reports.

Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG)

This fund holds some of the largest companies in major developed countries. Finding an ETF that hits all the points we discussed earlier is hard, however, this one certainly tries.

Technology companies make up the largest sector holding at around 26%.

It excludes companies with the following business activities:

• Fossil fuels
• Nuclear power
• Alcohol
• Tobacco
• Gambling
• Weapons
• Adult entertainment
• Conduct related to severe controversies

One thing I like about this fund is the low management fee. At just 0.18%, it's very competitive in the ETF market. Performance wise, it has returned around 16% since inception. It also rebounded well from the market crash in March. Dividends are paid quarterly and are currently sitting at around a 1.9% to 2% return. A fact sheet can be found here.

Foolish takeaway

Ethical investing can be difficult when there are so many opportunities in the market. At the end of the day, though, these funds and the companies they hold are helping to make the world a better place so I feel they are worthy of consideration.

The great thing about ETFs is that you gain diversity to sectors and industries that interest you. Adding these ethically conscious ETFs to your portfolio may just be the balance and peace of mind you are seeking.

The post Interested in ethical investing? Look at these 3 ETFs appeared first on The Motley Fool Australia.