Do you have a Vanguard or Ascensus account? Are you interested in making a difference on climate change? The Sphere 500 Fossil-Free Fund (SPFFX) offers a way to invest your savings in a diversified portfolio of large US companies, without supporting the worst offenders regarding climate change.
The Sphere 500 Fossil-Free Fund also votes the shares in the companies it owns for the planet, rather than following board recommendations as most mutual funds do. This gives your dollars a voice so your money can create real positive change for the planet at the corporations in which you invest.
So, you have an account with Ascensus. How do you invest your money with Sphere? Below is a step-by-step guide.
First, why invest in the Sphere 500 Fossil-Free Fund?
Being thoughtful about where your investment dollars go can be one of the most important decisions you can make when it comes to your personal impact on climate change.
While there are no complete studies on the carbon footprint impact that personal banking and investments have compared to the rest of one’s lifestyle, the Carbon Bankroll report found that “for some of the world’s largest companies, including Google, Meta, Microsoft, and Salesforce, their cash holdings are their largest source of emissions; increasing total emissions by 91% - 112%, when compared to most recently reported emissions.” Another recent report found that the US financial sector has a carbon footprint equivalent to the total emissions of the country of Russia.
Carbon footprints aside, investing in fossil fuel companies sends them a message. It tells them: “good job, keep doing what you’re doing.” Divesting from (a term that just means removing investments from, or not investing in) the fossil fuel industry tells fossil fuel companies that you are no longer ok with “business as usual”.
A similar tactic was used to fight against the Apartheid system of institutional racial oppression in South Africa in the 1980s, with amazing success.
For companies outside of the fossil fuel industry, they oftentimes can do better on climate-related initiatives.
You may not realize this, but every time you invest in a mutual fund or exchange traded fund (ETF), you are buying shares in the underlying companies that the fund invests in. Because you own those shares, you have a right to vote on issues that the company or shareholders bring to a shareholder vote. The majority of funds vote your shares on your behalf, and they typically vote in whatever way the company’s board recommends.
Some funds, however, take a more activist stance. One such fund that made waves last year is Engine No 1, which succeeded in replacing several Exxon board members with climate-friendly directors via shareholder vote, disrupting Exxon’s “business as usual” decisions and requiring them to consider more climate-friendly action.
The Sphere 500 Fossil-Free Fund votes its shares for the planet, rather than for the status quo, by using a voting service offered by the non-profit As You Sow called As You Vote.
This means that anytime a shareholder vote takes place at a company the Sphere fund invests in on a topic having to do with climate change, SPFFX will vote your shares for climate action. This could encourage banks that finance fossil fuel projects to stop financing those projects, or it could encourage logistics companies that have gas-guzzling fleets to replace them with electric vehicles. SPFFX gives your dollars a voice in a way that most funds do not.
Beyond the climate impact that your dollars can have in SPFFX, it can also be good for your bottom line. Investors often put a portion of their investments in a well-diversified swath of the US economy like the S&P 500, where historical growth has averaged between 7-10% over the long term. Investing in SPFFX gives access to this type of diversified investment, with similar low fees to what would be charged in a typical S&P 500 fund. You can learn more about the 10-year back test of the Sphere 500 Fossil-Free Index here.
Invest in the Sphere 500 Fossil-Free Fund via your Vanguard IRA
If you made contributions to a 401(k) plan with a prior employer on Vanguard, you can roll over those 401(k) dollars into an Individual Retirement Account, commonly called an IRA.
A traditional IRA keeps the tax-advantaged status of a 401(k), because the money you contributed to it while you were with your former employer used pre-tax dollars. Whereas a 401(k) plan typically has a limited number of investment options that have been pre-selected by the employer or a representative of the employer, an IRA can invest in most mutual funds and exchange traded funds (commonly called ETFs).
Rolling over your 401(k) into an IRA can make more investment options available to you, if your former employer has not made the decision to include climate-friendly investment options in their 401(k) fund lineup.
You can roll over your Vanguard 401(k) to an IRA on any brokerage platform, but many 401(k) platforms require you to physically mail a paper check of the funds when switching platforms.
Rolling over from an Vanguard 401(k) to an Vanguard IRA helps you avoid that step. The Vanguard platform has a number of climate-friendly investment options available to customers — including SPFFX — which avoids investing in the fossil fuel industry and votes your shares in the companies it does invest in for the planet, giving your dollars a voice to encourage positive change at the companies you invest in through the fund.
Once you have rolled over your 401(k) into a Vanguard IRA, you can invest in SPFFX by navigating to “Trade non-Vanguard funds via FundAccess®” and looking up SPFFX under the Fund Family “Sphere”. Click in to the Sphere 500 Fossil-Free Fund and scroll to the bottom of the page to select the “Buy” button.
Invest in the Sphere 500 Fossil-Free Fund via your Ascensus 401(k)
If your current employer offers you a 401(k) plan using Ascensus, you can ask your benefits manager to add SPFFX as a climate-friendly investment option on your plan. Check out our example email to HR for some ideas on what to say as you make the request.
If you are a person in management at a company that offers an Ascensus 401(k) plan and you would like to offer a climate-friendly investment option to your team, email your 401(k) advisor or your Ascensus representative directly to request that SPFFX be added to your plan lineup. Here is our example email to a 401(k) provider to help you with the request.
Your advisor will help your company document that you have followed a prudent process in deciding to add the option to your fund menu by looking at how the fund compares to its peer group, which in this case is the group of large-cap core index funds. In particular they will look at measures like performance, risk profile, and fees.
Once they have documented that this option compares favorably to its peers, they will request for Ascensus to add the fund to your company’s fund lineup.
Make sure to check out the FAQ section on this page to help answer any more detailed questions that come up as your 401(k) advisor or provider looks into adding this option for your company.
Invest via another Ascensus account
Anyone can invest in SPFFX, even without using a 401(k) or IRA account. Ascensus offers college savings accounts known as 529 accounts, for example, where you may want a climate-friendly investment option when saving for your child’s future.
For more ideas on how to take action, visit our take action page here. Never hesitate to reach out to firstname.lastname@example.org with any questions. We’d love to help.
Before investing in the Sphere 500 Fossil-Free Index Fund (“SPFFX”), consider the index’s investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, please visit https://www.reflectionam.com/sphere, call 844-2-SPHERE, or talk to your financial advisor. Read the prospectus carefully before investing. The Sphere 500 Fossil Free Index tracks the S&P 500 and excludes the ~40 fossil fuel companies that are in the top 500 list. The Sphere 500 Fossil Free Index will not invest in companies whose main lines of business include producing, distributing, or refining fossil fuels, holding reserves of fossil fuels, utilities that are primarily fossil fuel-powered, and producers of equipment for any of the above. However, the fund may invest in companies that use fossil fuel as a part of their business or have used fossil fuels in the past. The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Index returns do not reflect the effects of fees or expenses. It is not possible to invest directly in an index. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance, please call 844-2-SPHERE or visit the Fund’s website at https://www.reflectionam.com/sphere. Index performance is discussed for illustrative purposes only as a benchmark for each strategy’s performance and does not predict or depict performance of that strategy. While index comparisons may be useful to provide a benchmark for a strategy’s performance, it must be noted that investments are not limited to the investments comprising the indices. Each of the strategy benchmark indices are unmanaged and cannot be purchased directly by investors. Past performance does not guarantee future results. No portion of the content should be considered a solicitation to buy or an offer to sell shares of the fund in any jurisdiction where the solicitation or offer would be deemed unlawful under the securities laws of such jurisdiction. The Sphere 500 Fossil-Free Index Fund is distributed by Vigilant Distributors, LLC, member of FINRA and SIPC. NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE