Exactly what a sustainable investment means is interpreted in very different ways. In our sustainable ETF portfolio, we combine economic responsibility with ecological and social responsibility. We diversify the investment especially broadly and thereby minimise the risks. Here is what defines our approach.
1) Make a contribution to change
Contributing something to the transformation of the global economy means becoming active. And, for example, making your voice heard with companies. Shareholders can use their voting rights to do this. When investing in ETFs, the fund companies take this on. Some of them factor in ESG criteria and recommendations from specialists or NGOs. Others, by contrast, hardly do so at all. ESG is the abbreviation for „Environmental“, „Social“ and „Governance“.
„When selecting ETFs for our sustainable portfolio, we pay attention to how actively the fund companies exercise the voting rights entrusted to them, in line with the ESG criteria,“ explains Kai Hattwich. The Lead Portfolio Manager at Quirin Privatbank and at quirion played a leading role in shaping the portfolio. It is important to him that entire sectors are not simply excluded. „That does not make the world any better.“ Those who exert active influence, on the other hand, can genuinely make a difference.
2) Invest your money systematically
With any investment, the first thing that matters is to strike the best possible balance between return potential and risk in a systematic way. Otherwise, investment success would be left to chance. And that usually goes wrong. Anyone who wants to build wealth over the long term – and in this sense sustainably – should therefore pay attention to risk diversification. Because, according to the findings of capital market research, this is a key factor in investment success.
Diversify as broadly as possible: this is the approach taken by quirion's global ETF portfolio. In the sustainable portfolio, ecological and social criteria narrow down the product selection further. Diversification nevertheless remains the overriding priority.
quirion's sustainable ETF portfolio currently comprises around 3,000 equities and – depending on your risk profile – bonds from more than 500 issuers. By way of comparison: individual, globally investing funds focused on sustainability often hold fewer than 100 positions in their portfolio.
3) Avoid high costs
Investing in ETFs is usually far cheaper than investing in active funds. According to a study published in 2023 by the European securities regulator ESMA, the costs of active ESG equity funds in 2021 averaged 1.4 percent, whereas those of comparable ETFs were only 0.6 percent. The total expense ratio (TER) of the sustainable ETF portfolio at quirion is between 0.20 and 0.29 percent per year. On top of that come the costs of the digital asset management, amounting to 0.48 percent per year.
The services of the digital asset management include the investment strategy, which is based on scientific findings. And its implementation in ETF portfolios for the various risk profiles. Investors do not just save themselves time and effort: on their own, they could not get to the bottom of many details so carefully and then take them into account accordingly. These include the real costs, which can be identified from deviations between the ETF's performance and that of the index. Or the security of the issuers, which Hattwich and his team examine closely on a regular basis.
4) Invest to suit your profile
To match your individual investment horizon and personal appetite for risk, ten strategies with different equity and bond ratios are available. Because a pure equity portfolio is not suitable for everyone. In quirion's portfolios, bonds serve above all as a stabiliser. They dampen the price swings of the equity portion. When your asset management is set up, your risk profile is determined in just a few steps and the strategy is then tailored to it.
In addition: regularly, and at least once a year, quirion corrects the effects of value fluctuations on the portfolio weightings through rebalancing. Because as prices move, the weighting ratios shift over time. Through this balancing of value fluctuations, our customers' portfolios remain aligned with their risk profile.
5) Unlock return potential over the long term
quirion's sustainable ETF portfolio offers promising prospects for building wealth. This was demonstrated once again recently by an evaluation carried out by FMH-Finanzberatung for the Handelsblatt. In this comparison of the sustainable strategies of nine robo-advisors, quirion came first, with the best performance over 3 years. quirion was also among the cheapest providers.
Investors can also use quirion's sustainable ETF portfolio as part of a savings plan, from as little as 25 euros a month. „Investing in the capital markets only unfolds its full momentum over a long-term horizon,“ Hattwich emphasises. „That fits well with the topic of sustainability – after all, the commitment to social change is also directed towards the future.“
