Still, there are questions about how fully aware young investors are about where and how their money is being allocated — particularly as apps like Stash and Acorns effectively sweep spare change into ETF investments.
“Some robo-investing apps give you an overview of sector,” said Libatique. “But you have to dig deeper to review the exact holdings within those funds.”
Stash has attempted to make investing simple by renaming ETFs within the app, in an appeal to an investor’s personal interests. For example, the iShares U.S. Aerospace & Defense ETF is renamed “Defending America” and the ETFMG Video Game Tech ETF is renamed “Gamers FTW”.
In some cases, funds may hold assets that socially-conscious investors may find unpalatable, experts say. However, by foreclosing on certain sectors or activities, socially responsible investors could undermine their own portfolio, which experts recommend diversifying across a range of assets and industries, some say.
“It’s limiting to have a perfect socially responsible ETF or portfolio,” said Doug Boneparth, a financial advisor at Bone Fide Wealth. “Cutting out entire industries and removing portfolio diversity can hurt performance.”
While there have been isolated controversies related to whether some socially responsible financial instruments live up to their ideals, the current system relies on the apps users’ accountability and decision to access the resources offered by micro investing apps to educate themselves.
Investors have the freedom to view their portfolio holdings, while content related to socially responsible investing in general is also provided.
“An important point is transparency, but everyone has different views and different beliefs,” said Krieg. “Some people come here wanting to buy ‘Defending America’, others want to buy ‘Do the Right Thing’ and it is not my role to tell people what to do.”
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