Tax-Sheltered ESG Retirement-Saver Portfolios for ETF Investors
These low-cost ETF portfolios are designed to deliver potent asset-class exposures to ESG-conscious investors saving for retirement.
My model Retirement Saver ESG portfolios are geared toward environmental, social, and governance-minded investors who are still working and accumulating assets for retirement: 20-somethings, 50-somethings, and everyone in between.
As I put the ETF portfolios together, I was struck by the quality, breadth, and low costs of the exchange-traded funds available with ESG mandates. ETF investors can now find low-cost ESG products in all the major asset classes, making it fairly simple to create a well-diversified, low-cost portfolio consisting of securities with good ESG attributes. I’ve created several suites of ESG portfolios: ETF portfolios geared toward retirees as well as retirement savers, and traditional mutual fund portfolios created toward those same groups. Some of these portfolios are geared toward investors’ taxable accounts while others, like the ones discussed below, are aimed toward tax-sheltered portfolios (for example, IRAs).
About the Portfolios
To populate the portfolios, I employed ETFs that receive Medalist Ratings from Morningstar’s analyst team. Most of the funds earned Medalist Ratings of Gold, though I’ve used Silver- and Bronze-rated funds when suitable Gold-rated, no-load options that are accepting new investments are unavailable.
The portfolios are geared toward investors’ tax-sheltered accounts, so I didn’t consider holdings tax efficiency when populating the portfolios.
How to Use These Portfolio Examples
My goal with these portfolios is to depict sound asset-allocation and portfolio-management principles rather than to shoot the lights out with performance. That means that investors can use them to help size up their own portfolios’ asset allocations and suballocations. Alternatively, investors can use the portfolios as a source of ideas in building out their own portfolios. As with the Bucket portfolios, I’ll employ a strategic (that is, long-term and hands-off) approach to asset allocation; I’ll make changes to the holdings only when individual holdings encounter fundamental problems or changes, or if they no longer rate as higher-conviction Morningstar Medalists.
The portfolios vary in their amounts of stock exposure and, in turn, their risk levels. The Aggressive Portfolio is geared toward someone with many years until retirement and a high tolerance/capacity for short-term volatility. The Conservative portfolio is geared toward people who are just a few years shy of retirement. The Moderate portfolio falls between the two in terms of its risk/return potential.
Aggressive Tax-Deferred ESG Retirement Saver Portfolio for ETF Investors
- Anticipated Time Horizon to Retirement: 35–40 years
- Risk Tolerance/Capacity: High
- Target Stock/Bond Mix: 95/5
Portfolio Allocations
- 55%: Vanguard ESG US Stock ESGV
- 40%: Vanguard ESG International Stock VSGX
- 5%: iShares ESG U.S. Aggregate Bond ETF EAGG
Moderate Tax-Deferred ESG Retirement Saver Portfolio for ETF Investors
- Anticipated Time Horizon to Retirement: 20–25 years
- Risk Tolerance/Capacity: Moderate
- Target Stock/Bond Mix: 80/20
Portfolio Allocations
- 48%: Vanguard ESG US Stock ESGV
- 32%: Vanguard ESG International Stock VSGX
- 20%: iShares ESG U.S. Aggregate Bond ETF EAGG
Conservative Tax-Deferred ESG Retirement Saver Portfolio for ETF Investors
- Anticipated Time Horizon to Retirement: 2–5 years
- Risk Tolerance/Capacity: Low
- Target Stock/Bond Mix: 50/50
Portfolio Allocations
Editor’s Note: A version of this article was previously published on April 29, 2025.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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