Newday Impact Investing App (2021 Review)
Newday Impact is a new app that helps investors, especially millennials, invest with impact. It’s great to see more impact investing apps, but we were surprised to see some of the companies Newday chose for its impact portfolios.
SustainFi August 13, 2021
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Rating: Good (3.5 / 5)
- Choice of 14 impact portfolios, including three religious options
- 5% of fees go to NGO partners
- Interesting thematic investing concept
- Controversial stock selection in impact portfolios
- High fees (0.75% of assets), plus additional third-party fees
- Limited track record and performance data
- Mixed app reviews and reports of glitches
|SustainFi Rating:||3.5 / 5|
|Management fee||• 0.75%
• $20 annual third-party fee
|ESG options||Newday offers 14 thematic impact portfolios, such as Climate Action and Diversity and Inclusion|
|Investment expense ratio||Included|
|Accounts supported||• Individual investment accounts
• Traditional IRAs
• Custodial accounts
|Best for||Many impact themes to choose from|
What is Newday Impact Investing?
Newday is an impact investing mobile app. The San Francisco-based startup offers 14 impact portfolios, including Catholic, Orthodox Jewish, and Islamic options. Newday launched in June 2018 and managed nearly $115 million in assets by the end of 2020. As a certified B Corporation, Newday has pledged to balance profit and purpose.
To start investing, you need to download the app and answer a few questions about your impact goals and how much risk you are willing to take. The algorithm recommends asset classes, including equities, bonds, and real estate.
Unlike most robo-advisors, Newday invests most of your money in stocks, not in mutual funds or exchange-traded funds (ETFs). The exceptions are a mutual fund that invests in affordable housing and a green bond ETF.
Newday’s investment team selects stocks for each impact portfolio. The stocks fit themes like “Global Impact,” “Ocean Health,” or “Sustainable Agriculture.” The team assigns an impact score to each stock based on how much revenue is sourced from impactful operations. The portfolios exclude companies in controversial industries, such as alcohol, tobacco, and firearms.
Newday does not provide any financial planning or human financial advisory services.
How to sign up with Newday
You can sign up via the app only. Once you you’ve downloaded the app, you need to go through the following steps:
- Confirm your name and contact information
- Select up to three environmental or social initiatives like “protect wild tigers” or “protect biodiversity.” (Newday will use your choices to recommend impact portfolios and choose where to donate 5% of its profits)
- Confirm or modify their selection of several of the 14 impact portfolios, such as “Fresh Water” or “Climate Action”
- Choose how much risk you want to take. Newday offers four options, from conservative to very aggressive
- Adjust your portfolio, if needed (however, we experienced some glitches when trying to adjust the portfolio)
- Link your bank account through Plaid
- Confirm your identity
- Fund your account (several users reported glitches when trying to do that)
Newday minimum investment
The minimum investment is $100. Newday also lets you automatically add to your investment weekly or monthly.
Newday management fee
Newday charges an annual management fee of 0.75% of assets under management (i.e. $75 on a $10,000 investment). This is closer to a mutual fund fee (1% average) than a robo-advisor fee (0.25%-0.35%), though 0.75% includes any underlying fund expense ratios.
(Most robo-advisors charge a management fee plus the expense ratios of the funds they pick for you. The total adds up to around 0.40%-0.50% for most robo-advisors, so that Newday’s 0.75% fee is still more expensive.)
There are additional fees paid to a third party, Apex Clearing Corporation, which acts as the custodian of your account, including:
- $60 account termination fee
- $20 annual maintenance fee
- $5 for each paper monthly statement
- $2 for each paper confirmation
Newday account types
Newday offers the following account types:
- Individual investment accounts
- Traditional IRAs
- Custodial accounts (UGMA accounts opened on behalf of minors)
In addition to investing through the app, Newday offers to manage an account for you using the Charles Schwab platform. They also work with financial advisors.
The Newday App
If you invest with Newday, you have to do it through the mobile app. As of August 2021, the app had the following ratings:
- Apple App Store: 4.0 / 5 (161 ratings)
- Google Play: 3.8 / 5 (98 ratings)
Users have recently complained about not being able to link their bank accounts, crashes, and slow response times.
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What initiatives does Newday support?
When you sign up, Newday lets you pick among the following environmental and social initiatives:
- Help children
- Protect biodiversity
- Protect fresh water
- Protect wild tigers
- Commit to Halacha
- Protect marine wildlife
- Produce clean energy
- Promote diversity and inclusion
- Bring workplace happiness
- Live the Maqasid Al Shariah
- Keep beaches clean
- Stop plastic straws
- Protect the Poles
- Remove ocean plastic
- Protect wild gorillas
- Help sea turtles
- Provide equal pay
- Save coral reefs
- Provide education
- Fight poverty
- Protect giant pandas
- Lead with women
- Practice Catholic guidance
- Stop wildlife crime
- Provide clean water
- Fight deforestation
The app doesn’t tell you upfront how it will be supporting these initiatives, though it does list several charities for some of the causes. For example, if you select “Protect the Poles,” Newday lists the Ocean Conservancy, the Alaska Conservation Foundation, and Sea Legacy.
Newday Impact Portfolios
Based on your impact preferences, Newday recommends several impact portfolios. Each portfolio offers a selection of stocks or funds picked by the Newday team. Most portfolios include 40-60 companies.
You can see how each portfolio performed versus a benchmark, such as the S&P 500. You can also see what types of sectors the portfolio invests in, such as technology or consumer staples, and the top ten stocks. (However, when we tried this, the app was, in some cases, directing us to different portfolios from the ones we selected.)
Here is what the interface looks like for the Fresh Water Portfolio:
You can remove the portfolios you don’t like or add different ones.
Newday Impact offers the following 14 portfolios:
1. Fresh Water
According to Newday, “the portfolio gives exposure to companies who lead their respective fields in maximizing water efficiency, and who are committed to combating pollution and ensuring affordable and equitable access to water resources.”
The top ten holdings of the portfolio included water utility American Water Works (AWK), which made sense. But we were more surprised by the inclusion in the top ten of paper products manufacturer Kimberly-Clark (KMB), the Campbell Soup Company (CPB), and chocolate manufacturer Hershey Co (HSY).
2. Climate Action
The portfolio “includes companies that operate at significantly reduced gas emissions levels or develop the technology used to achieve these levels.”
The top ten stocks in the portfolio did not include the clean energy companies we usually see in climate portfolios. Instead, we saw industrial conglomerate 3M Co (MMM), utilities Alliant Energy (LNT) and Edison International (EIX), Campbell Soup (CPB), Cisco (CSCO), bleach marker Clorox (CLX), and several pharma companies.
3. Diversity and Inclusion
According to Newday, “the Diversity and Inclusion Portfolio invests in companies that emphasize diversity as a crucial element of their workplace. These companies target racial, gender, and cultural diversity not only in their workforce but also in their board and executive structure, leading to different perspectives and new innovations.”
The portfolio must “exclude any companies that have a record of controversy related to their business practices. If a company has had a controversy related to diversity, compensation, or corruption within its workplace, it won’t be in the portfolio.”
However, the top ten stocks included Amazon (AMZN), which has been widely criticized for treating workers poorly. Other top ten stocks were Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), International Paper (IP), Target (TGT), UnitedHealth Group (UNH), 3M Co (MMM), Accenture Plc (ACN), and Cognizant (CTSH).
4. Access Capital
The portfolio invests in the Access Capital Community Investment Fund (ACASX), a mutual fund. The fund supports affordable housing and community development, servicing low and moderate-income individuals and communities in the U.S.
5. Global Impact
The portfolio, built in partnership with Conservation International, lets you “invest in companies whose core business addresses one or more of the world’s social and environmental challenges, as defined by the United Nations Sustainable Development Goals. These companies must derive revenue from positively impacting one or more of these universal goals and maintain minimum Environmental, Social, and Governance standards. This portfolio is designed to be your fully diversified, core global equity holding in your overall investment allocation.”
Fittingly, the top ten impact investments included several healthcare stocks, including pharma companies Baxter International (BAX) and Merck (MRK) and medical device manufacturer Becton Dickinson (BDX).
However, we were more puzzled by the inclusion in the top ten of the cosmetics manufacturer L’Oréal (OR), paper products company Kimberly-Clark Corporation (KMB), and packaged food giant General Mills (GIS).
6. Animal Welfare
The goal of the animal welfare portfolio is to “invest in companies that protect biodiversity, animals, and their habitats.”
The top ten stocks were listed as dairy company Danone (BN), cereal manufacturer General Mills (GIS), healthcare companies GlaxoSmithKline (GSK), Pfizer (PFE), Sanofi (SANOFI) and Merck (MRK), Nestle (NESN), Novozymes (NZYM), Republic Services (RSG), and Stora Enso (STERV).
According to Cruelty Free Investing, GlaxoSmithKline, Merck, Pfizer, and Sanofi test on animals, so we weren’t sure why these four stocks were in the top ten for the Animal Welfare Portfolio.
7. Stakeholder Capitalism
This portfolio lets you “invest in companies working to protect and promote the interests of all stakeholders, not just shareholders.”
The portfolio included industrial conglomerate 3M (MMM), medical device manufacturers Becton Dickinson (BDX) and Medtronic (MDT), bleach market Clorox (CLX), Campbell Soup Company (CPB), cereal maker General Mills (GIS), chocolate manufacturer Hershey (HSY), retailer Kroger (KR), industrial gas company Linde (LIN), and Procter & Gamble (PG).
8. Ocean Health
The Ocean Health Portfolio, built in partnership with the Lonely Whale Foundation, included tech stocks like Oracle (ORCL), Amazon (AMZN), and Garmin (GRMN), and several healthcare and industrial companies in its top ten.
According to a report by Oceana, Amazon plays a big role in ocean plastic pollution, so we weren’t sure why it should be in the top ten stocks for the Ocean Health Portfolio.
9. Sustainable Agriculture
According to Newday, “transforming the agriculture sector has the potential to improve the lives of millions of people living in poverty around the world.”
According to the app, the portfolio’s top ten stocks included utilities Ameren Corp (AEE) and Consolidated Edison Inc (ED), fresh fruit supplier Fresh Del Monte (FDP), retailer Kroger (KR), Verizon Communications (VZ), soft drinks manufacturer Keurig Dr Pepper (KDP), and packaged food manufacturers General Mills (GIS) and Conagra Brands (CAG).
Del Monte aside, we were not sure why many of these companies were included. Verizon, in particular, doesn’t seem to have much to do with sustainable agriculture.
10. HIP Great Place To Work
The HIP Great Place to Work portfolio is based on the annual list of the Great Place to Work Institute, published in Fortune magazine yearly, which rates and ranks employee-ranked metrics, feedback, and surveys. “Great workplaces” prioritize employee pay, benefits, and recognition, which can lead to higher employee retention, engagement, and innovation.
11. NIA Global Solutions
According to Newday, the NIA Global Solutions Portfolio is “constructed for impact investors focused on creating a just, sustainable, and inclusive world.” NIA Global Solutions specializes in gender lens investing, which seeks to advance gender equality. The top ten investments were mostly technology, healthcare, and renewable energy stocks.
12. Magni Catholic Values
The Catholic values portfolio was designed based on the investment guidelines of the U.S. Council of Catholic Bishops (USCCB) and chapters seven and eight of Catholic Social Teachings. The portfolio is designed by Magni, a provider of governance research that Newday recently acquired.
To design the portfolio, Magni applied all 14 points in the USCCB guidelines. Six points related to prohibited activities, and companies performing those activities were excluded. Eight points related to desired activities and/or results with companies getting greater allocation for demonstrating desirable behaviors.
13. Magni Halakhic
The Halakhic Portfolio is based on Jewish law. Magni has screened companies for compliance with Jewish law under the guidance of the Bais HaVaad Halacha Center.
14. Magni Islamic Stewardship
The Islamic Stewardship portfolio is Shariah-compliant, removing companies profiting from haram products or services. In addition, the portfolio prioritizes investing in companies that comply with Islamic values as defined by the Maqasid al Shariah.
After you’ve picked your themes, you can select your risk tolerance. There are four options:
- Not risky (conservative)
- A little risky (balanced)
- Risky (aggressive)
- Super risky (very aggressive)
Once you’ve specified your risk preferences, Newday adds additional asset classes to best meet your goals. These include real estate, dividend stocks, and bonds:
- HIP Sustainable Real Estate
The Real Estate portfolio invests in real estate investment trusts (REITs) which generate dividends. HIP Investor, a provider of sustainability ratings and data, rates all tradeable REITs for sustainability, including what share of properties are LEED-certified, which can lead to lower usage and costs of energy, water, and waste.
- HIP Global Dividends
HIP Global Dividends portfolio invests in firms with attractive dividends and leadership in sustainability, as rated by HIP. The portfolio includes U.S. and international stocks.
- HIP Global Impact Bonds
How have Newday Impact portfolios performed?
Past performance data for any of the portfolios is minimal. In fact, the app is only showing performance data through May 2020.
- Newday is an interesting thematic investing concept, but we were very surprised by some of the stocks in its impact portfolios. For example, the Animal Welfare portfolio included multiple companies that test on animals in its top ten investments. The Ocean Health portfolio included Amazon, which has been called out as an ocean polluter
- The app also has some technical issues, and it’s expensive (0.75% of assets under management annually)
- We will watch how Newday’s offerings develop going forward
Compare robo-advisors with sustainable options
We compared robo-advisors with an ESG offering based on management fees, ESG portfolio expense ratios, the percentage of the ESG portfolio invested in ESG funds vs. traditional funds, ESG portfolio ratings (from Sustainalytics and MSCI), portfolio exposure to energy, transparency, features like tax-loss harvesting and automatic rebalancing, and access to human advisors.