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First Cut ETFs
Socially Responsible ETFs
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Socially Responsible Mutual Funds
Portfolio Strategies
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Virtue investments are labeled as being socially responsible investments. Strategies focusing on this encompass environmental, social and governance (ESG) characteristics and seek to align a portfolio with an investor’s personal beliefs. There is no single universal standard, but investors can look at the holdings of mutual funds and exchange-traded funds (ETFs) that follow an ESG approach as a starting universe (see First Cut Mutual Funds and First Cut ETFs).
Our starting point for this month’s First Cut is the iShares MSCI KLD 400 Social ETF 
(DSI), which is based on one of the first socially responsible investing indexes. It invests in large-, mid- and small-cap companies with high ESG ratings to screen on.
The fund’s holdings can be downloaded from the iShares website; click the Portfolio tab and look for a link under the Holdings section labeled Detailed Holdings and Analytics. After downloading the CSV file, we copied and pasted the tickers into a plain text file. We then opened AAII’s Stock Investor Pro and created a new portfolio by importing the text file with the portfolio editor tool.
We chose to focus on a growth-oriented strategy. Specifically, the screen required stocks to have realized higher revenue growth than their industry peers over both the past five years and the past 12 months. This narrows the results to the companies with the highest growth rates within their respective industries. The screen then required the I/B/E/S consensus estimate among analysts to project annualized earnings per share growth rates of at least 5% for the current year and the next two years. A minimum growth rate of 5% was chosen to ensure that projected growth is in excess of the rate of inflation. The list was then narrowed to the 20 virtue stocks with the highest expected growth rates for their current fiscal year.
Top 20 Virtue Companies Passing the Growth Screen
(Ranked by Expected EPS Growth for the Current Fiscal Year)
| Company | Ticker |
Share Price (3/10) ($) |
Sales Growth 5 Yr (%) |
Indus Sales Growth 5 Yr (%) |
Sales Growth 12 Mo (%) |
Indus Sales Growth 12 Mo (%) |
EPS Est Growth Y0 (%) |
EPS Est Growth Y1 (%) |
EPS Est Growth Y2 (%) |
Industry |
|---|---|---|---|---|---|---|---|---|---|---|
| BlackRock, Inc. | BLK | 722.00 | 7.3 | 5.4 | 11.5 | (0.3) | 36.8 | 41.0 | 45.2 | Investment Mgmt & Fund Opers |
| Mettler-Toledo Inter’l | MTD | 1,050.00 | 5.2 | 2.7 | 2.5 | (5.7) | 29.7 | 32.8 | 37.1 | Industrial Machinery & Equip |
| Sherwin-Williams Co. | SHW | 706.04 | 10.1 | 2.5 | 2.6 | (8.1) | 27.1 | 29.8 | 32.8 | Chemicals - Commodity |
| Lam Research Corp. | LRCX | 543.51 | 13.8 | 12.2 | 24.9 | 17.9 | 24.9 | 26.4 | 29.8 | Semiconductor Equip & Testing |
| Laboratory Corp. of Amer | LH | 239.22 | 10.0 | 5.8 | 21.0 | 2.5 | 21.5 | 15.4 | 17.1 | Health Care Facilities & Services |
| W W Grainger Inc. | GWW | 388.45 | 3.4 | 2.7 | 2.7 | (5.7) | 18.5 | 21.1 | 23.7 | Industrial Machinery & Equip |
| Jazz Pharmaceuticals PLC | JAZZ | 160.84 | 12.3 | 11.1 | 9.3 | 4.7 | 16.2 | 17.9 | 16.8 | Pharmaceuticals |
| Deere & Company | DE | 352.69 | 4.2 | 0.8 | (4.8) | (15.9) | 15.7 | 18.1 | 20.5 | Heavy Machinery & Vehicles |
| Zebra Technologies Corp. | ZBRA | 468.35 | 4.0 | 3.8 | (0.8) | (3.4) | 15.5 | 17.1 | 18.6 | Electronic Equipment & Parts |
| NVIDIA Corp. | NVDA | 500.81 | 27.2 | 5.1 | 52.7 | 5.4 | 13.4 | 14.9 | 17.8 | Semiconductors |
| Domino’s Pizza, Inc. | DPZ | 354.08 | 13.2 | 0.4 | 13.8 | (14.5) | 12.9 | 14.8 | 17.0 | Restaurants & Bars |
| Becton Dickinson and Co. | BDX | 242.85 | 10.7 | 7.8 | 4.9 | 0.1 | 12.8 | 13.4 | 14.6 | Medical Equip, Supply & Distrib |
| AbbVie Inc. | ABBV | 106.79 | 14.9 | 11.1 | 37.7 | 4.7 | 12.4 | 13.8 | 12.0 | Pharmaceuticals |
| T. Rowe Price Group Inc. | TROW | 176.33 | 8.1 | 5.4 | 10.5 | (0.3) | 11.9 | 12.5 | 13.2 | Investment Mgmt & Fund Ops |
| Mohawk Industries, Inc. | MHK | 183.64 | 3.4 | 0.8 | (4.2) | (9.9) | 11.8 | 13.0 | 13.5 | Home Furnishings |
| Chubb Ltd. | CB | 169.65 | 13.5 | 5.4 | 5.1 | 4.9 | 11.8 | 12.6 | 13.9 | Insurance - Multiline & Brokers |
| Vertex Pharmaceuticals | VRTX | 214.04 | 43.2 | 14.7 | 49.1 | 15.4 | 11.3 | 13.0 | 14.2 | Biotech & Medical Research |
| Adobe Inc. | ADBE | 439.18 | 21.8 | 12.3 | 15.2 | 14.4 | 11.3 | 13.3 | 15.4 | Software |
| FactSet Research Systems | FDS | 312.49 | 8.2 | 7.0 | 4.5 | 3.1 | 11.2 | 11.8 | 12.6 | Professional Information Servs |
| Moody’s Corp. | MCO | 290.04 | 9.0 | 7.0 | 11.2 | 3.1 | 10.6 | 11.8 | 13.2 | Professional Information Servs |
| Source: AAII Stock Investor Pro, Refinitiv I/B/E/S and iShares. Data as of 3/10/2021. | ||||||||||
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