Fossil Free Investing With EarthFolio (Review)
EarthFolio has been advising clients on sustainable investments for over 20 years. They are one of the few robo-advisors that let you completely divest from oil and gas. Learn if EarthFolio is the right choice for you.
SustainFi Updated July 22, 2021
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Rating: Good (4.0 / 5)
✅ Pros
- Strong commitment to environmental, social, and governance (ESG) investing
- One of the few robo-advisors that will invest 100% of your portfolio in strong ESG funds
- 100% fossil free investing option
❎ Cons
- Relatively high fees, fund expense ratios, and minimum investment
- No extra features like budget planning tools or tax-loss harvesting
Summary
| SustainFi Rating: | 4.0 / 5 |
| Account minimum | $25,000 |
| Management fee | 0.50% |
| ESG options | Core and Fossil Free portfolios are made up of ESG-focused mutual funds and ETFs |
| Investment expense ratio | 0.28% for the Core Portfolio, 0.60% for the Fossil Free Portfolio (70% stocks / 30% bonds) |
| Accounts supported | • Individual and joint investment accounts • Traditional, Roth and SEP IRAs • Trusts • 401k rollovers |
| Human advisors | Yes |
| Tax-loss harvesting | No |
| Automatic rebalancing | Yes |
| Best for | Investors who want to be 100% fossil free and don't mind paying more for it |
What is EarthFolio?
EarthFolio is the first sustainable robo-advisor, with over $100 million in assets. It is managed by Blue Marble Investments, an investment advisor based in California. The firm was founded in 2000 by Art Tabuenca.
Like other robo-advisors, EarthFolio recommends portfolios based on your risk tolerance. They also offer an option to exclude all companies involved in oil, coal, and natural gas.
EarthFolio accounts are held at TD Ameritrade Institutional.
EarthFolio clients have access to AdvisorClient, a mobile app through which they can view their
account, access tax documents, and statements.
Signup process. The process takes about ten minutes to complete. You need to fill out a questionnaire, including how long you plan to invest. You then get a personalized recommendation, including its historical performance. EarthFolio also offers to compare your existing portfolio to the one recommended by them. Finally, you can consult an advisor before you invest.
Portfolio options. EarthFolio offers a Core Portfolio, which selects funds with high ESG ratings, and the Fossil Free Portfolio, which lets you completely divest from fossil fuels, such as oil, coal, and natural gas.
Account minimum. You need at least $25,000 to start investing. This minimum is higher than no minimum options from robo-advisors Acorns or Betterment. But it is lower than Personal Capital’s $100,000 minimum.
Management fee. EarthFolio charges an account management fee of 0.50% ($125 annually on a $25,000 investment.) This fee is higher than flat membership fees charged by Acorns ($12-60 annually on a $25,000 investment) or a 0.25% fee from Betterment ($62.5 annually on a $25,000 investment). If the account’s average daily balance drops below $25,000 in a quarter, EarthFolio will charge a $31.25 flat fee instead of the 0.50% annual management fee.
Fund expense ratios. In addition to the management fee, you need to pay the expense ratio of the funds included in the portfolio. These fees go to fund managers, not to EarthFolio. Assuming that 70% of your investments are in stocks, the expense ratio is 0.28% for the Core Portfolio and 0.60% for the Fossil Free option (an additional $70-150 annually on a $25,000 investment.)
Account types. EarthFolio supports multiple account types:
- Individual and joint investment accounts
- Traditional, Roth, and SEP IRAs
- Trusts
- 401k rollovers
Human advisors. All EarthFolio clients have email and phone access to a licensed advisor after their account is opened; they are not charged an additional fee to speak to an advisor. There is no limit on the number of times they can contact the advisor. (In comparison, Betterment or Ellevest charge additional fees for advisor access.)
If you have over $500,000 to invest, EarthFolio (Blue Marble Investments) can provide a dedicated,
fiduciary advisor to you through their private wealth management business. You will get additional
benefits, including Custom Impact Themes, Tax Free Income, and Individual Stocks.
Automatic rebalancing. EarthFolio will automatically adjust your holdings if the portfolio strays from the allocation that best suits your goals. Nearly all robo-advisors offer this feature.
Tax-loss harvesting. EarthFolio does not offer tax-loss harvesting, a popular strategy to save on taxes. If taxes are a concern and you have a lot to invest, Personal Capital may be a good option.
EarthFolio Core Portfolio
EarthFolio offers two portfolios that are 100% made up of sustainable funds. In comparison, Betterment’s Broad Impact Portfolio only puts around 70% of your assets in ESG funds (assuming a 70% stock / 30% bond split.)
Unlike EarthFolio, most robo-advisors include cheaper, conventional (non-ESG) funds in their sustainable portfolios. Non-ESG funds lower the all-in cost of the portfolio but often lead to lower sustainability scores.
EarthFolio Core Portfolio
The Core Portfolio invests 100% of your assets ESG funds. It includes exchange-traded funds (ETFs) and relatively cheap index mutual funds. (Learn more about ETFs and why they are cheaper than mutual funds.)
Here are the funds included in the Core Portfolio that is 70% invested in stocks and 30% in bonds:
- Large-cap stocks: iShares ESG Advanced MSCI USA ETF (USXF), TIAA-CREF Social Choice Equity Fund (TICRX)
- Mid-cap stocks: Calvert US Mid-Cap Core Responsible Index Fund (CMJAX)
- U.S. small-cap stocks: Nuveen ESG Small-Cap ETF (NUSC)
- Global stocks: Northern Global Sustainability Index Fund (NSRIX)
- Developed markets stocks: iShares ESG Advanced MSCI EAFE ETF (DMXF)
- Green bonds: Calvert Green Bond Fund (CGAFX)
- Corporate and investment-grade bonds: iShares ESG Aware 1-5 Year USD Corporate Bond ETF (SUSB), Nuveen ESG U.S. Aggregate Bond ETF (NUBD)
The blended cost for the 70% stock / 30% bond portfolio is 0.28% ($70 on a $25,000 investment annually). This is higher than the average expense ratio from many other robo-advisors we’ve analyzed (usually less than 0.20% for sustainable portfolios). However, most robo-advisors include lower-cost non-ESG funds in their sustainable portfolios, so the comparison is not 100% apples to apples.
EarthFolio will invest 100% of your assets in ESG funds, and the difference may be worth it to some investors. (The cost of the funds does not include the 0.50% fee that EarthFolio charges to manage your assets.)
Limited fossil fuel exposure. Although EarthFolio doesn’t market its Core Portfolio as fossil free, as of July 2021, only about 2% of the stocks in the portfolio were fossil fuel companies. ( Sustainable portfolios from many robo-advisors invest around 6% of equity assets in fossil fuel companies.)
This is what the ratings of the funds in the Core Portfolio look like:
| Asset Class | Fund | Expense Ratio | ESG Fund? | Allocation | % of Fund in Energy | MSCI ESG Score | Sustainalytics Rating |
|---|---|---|---|---|---|---|---|
| Large-Cap Stocks | iShares ESG Advanced MSCI USA ETF (USXF) | 0.10% | Yes | 23% | 0.0% | 8.1 | 5 / 5 |
| Large-Cap Stocks | TIAA-CREF Social Choice Equity Fund (TICRX) | 0.46% | Yes | 15% | 5.0% | 6.4 | 4 / 5 |
| Mid-Cap Stocks | Calvert US Mid Cap Core Responsible Index Fund (CMJAX) | 0.49% | Yes | 7% | 2.2% | 6.4 | 3 / 5 |
| Small-Cap Stocks | Nuveen ESG Small-Cap ETF (NUSC) | 0.40% | Yes | 7% | 3.7% | 7.3 | 4 / 5 |
| Global Stocks | Northern Global Sustainability Index Fund (NSRIX) | 0.30% | Yes | 11% | 3.7% | 7.9 | 4 / 5 |
| Developed Markets Stocks | iShares ESG Advanced MSCI EAFE ETF (DMXF) | 0.12% | Yes | 7% | 0.3% | 8.5 | 5 / 5 |
| Green Bonds | Calvert Green Bond Fund (CGAFX) | 0.73% | Yes | 7% | NA | 6.4 | NA |
| Corporate Bonds | iShares ESG Aware 1-5 Year USD Corporate Bond ETF (SUSB) | 0.12% | Yes | 12% | NA | 8.8 | 4 / 5 |
| Investment-Grade Bonds | Nuveen ESG U.S. Aggregate Bond ETF (NUBD) | 0.20% | Yes | 10% | NA | 6.9 | NA |
| Other | <1% | ||||||
| Portfolio Total | 0.28% | 100% in ESG Funds | 100% | 2.3% | 7.4 | 4.3 / 5 |
Data as of 7/19/2021. Sources: EarthFolio, Fossil Free Funds, MSCI, Sustainalytics
EarthFolio Fossil Free Portfolio
Even though the Core Portfolio has a low carbon footprint, EarthFolio has another option that fully excludes oil, coal, and natural gas holdings.
The Fossil Free Portfolio includes the following funds:
- Large-cap stocks: Brown Advisory Sustainable Growth Fund (BAWAX), Nuveen ESG Large-Cap Growth ETF (NULG)
- Mid-cap stocks: Parnassus Mid Cap Growth Fund (PARNX), Nuveen ESG Mid-Cap Growth ETF (NUMG)
- Global stocks: Morgan Stanley Institutional Fund (MGQAX), Pax Global Opportunities Fund (PAXGX)
- Corporate and investment-grade bonds: iShares ESG Aware 1-5 Year USD Corporate Bond ETF (SUSB), Nuveen ESG U.S. Aggregate Bond ETF (NUBD)
This option includes several expensive, actively managed mutual funds, which increases the all-in cost of the portfolio. For example, the Pax Global Opportunities Fund costs 1.23%. For the 70% stock / 30% bond portfolio, the expense ratio of the funds in the Fossil Free Portfolio is 0.60% ($150 on a $25,000 investment each year.)
But paying more may be worth it if you want a fully managed fossil free investment portfolio.
This is what the ratings of the funds in the Fossil Free Portfolio look like:
| Asset Class | Fund | Expense Ratio | ESG Fund? | Allocation | % of Fund in Energy | MSCI ESG Score | Sustainalytics Rating |
|---|---|---|---|---|---|---|---|
| Large-Cap Stocks | Brown Advisory Sustainable Growth Fund (BAWAX) | 1.11% | Yes | 15% | 0.0% | 7.9 | 4 / 5 |
| Large-Cap Stocks | Nuveen ESG Large-Cap Growth ETF (NULG) | 0.35% | Yes | 23% | 0.5% | 7.7 | 5 / 5 |
| Mid-Cap Stocks | Parnassus Mid Cap Growth Fund (PARNX) | 0.83% | Yes | 6% | 0.0% | 6.4 | 5 / 5 |
| Mid-Cap Stocks | Nuveen ESG Mid-Cap Growth ETF (NUMG) | 0.40% | Yes | 8% | 1.5% | 7.7 | 5 / 5 |
| Global Stocks | Morgan Stanley Institutional Fund (MGQAX) | 1.25% | Yes | 11% | 0.0% | 6.4 | 5 / 5 |
| Global Stocks | Pax Global Opportunities Fund (PAXGX) | 1.23% | Yes | 7% | 0.0% | 6.4 | 5 / 5 |
| Corporate Bonds | iShares ESG Aware 1-5 Year USD Corporate Bond ETF (SUSB) | 0.12% | Yes | 10% | NA | 8.8 | 4 / 5 |
| Investment-Grade Bonds | Nuveen ESG U.S. Aggregate Bond ETF (NUBD) | 0.20% | Yes | 19% | NA | 6.9 | NA |
| Other | <1% | ||||||
| Portfolio Total | 0.60% | 100% in ESG Funds | 100% | 0.3% | 7.3 | 4.8 / 5 |
Data as of 7/19/2021. Sources: EarthFolio, Fossil Free Funds, MSCI, Sustainalytics
💰 Takeaway
- EarthFolio is a full-service robo-advisor with a strong commitment to ESG investing (they don’t offer conventional funds) and fossil free investing
- If you feel strongly about divesting from fossil fuels, want to fully outsource your investments, and are prepared to pay more, EarthFolio is a good choice
- However, EarthFolio is one of the most expensive robo-advisors we’ve reviewed
🔔 Read our guide to socially responsible robo-advisors.
Compare robo-advisors with sustainable options
 |  |  |
Acorns ESG (Sustainable) Portfolio | Socailly Responsible Investing Pies | Socially Responsible Personal Strategy |
Fees $3-$5/month | Fees $0 ($125 for M1 Plus) | Fees 0.49%-0.89% |
Minimum $5 | Minimum $100 | Minimum $100,000 |
Methodology
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.