I was surprised how good I felt selling a crude oil fund and buying a sustainability fund

Gasoline prices have been on peoples’ minds lately, given how the war with Iran that Trump started for some dubious reasons has caused the price of Brent Crude Oil to shoot up markedly, as shown in this 10 year chart provided by the Trading Economics site. Our neighborhood gas station here in Salem, Oregon is charging $4.25 a gallon, last time I looked.

While I’m an environmentalist, a number of years ago our financial advisor thought that my wife and I needed a commodities fund in our investment portfolio, which otherwise largely consists of index mutual funds and a balanced 60-40 stock/bond actively managed fund. At that time, the price of crude oil was near the peak shown in the chart above, hovering around $110 a barrel.

Since the world has a finite supply of fossil fuels (thankfully), I figured that oil prices would remain at or above that price, given that demand for oil (unthankfully) seemingly will remain high despite efforts to move toward Green Energy: solar, wind, hydroelectric.

I was wrong. Which meant I regularly stared at a significant decline in the value of the iShares S&P GSCI Commodity-Indexed Trust that the financial advisor talked me into buying. I hadn’t realized that the main commodity tracked by GSG (ticker symbol) was oil, which made up 50-60% of the holdings. So since I’d bought GSG near the peak of the recent crude oil price, when the price of oil declined, so did the value of GSG.

So I was torn between a reluctance to sell GSG at a large loss, and a desire to get rid of an investment that I didn’t want, now that I understood how much GSG was tied to the price of oil. Claude, an AI model, said in part about GSG:

What is it? iShares S&P GSCI Commodity-Indexed Trust (ticker: GSG) is an ETF that tracks the S&P GSCI Total Return Index, giving investors broad exposure to commodities futures across energy, agriculture, metals, and livestock.

…Cons/Risks:

Heavy energy weighting — energy (especially crude oil) makes up ~50–60% of the index, so it behaves more like an oil ETF than a balanced commodity fund.

I think Trump made a mistake in going to war with Iran. However, I couldn’t help but notice that the price of GSG was shooting up along with the price of crude oil, given that crude oil comprises more than half of this commodity index fund.

Yesterday I decided to sell all of our GSG shares at a minor loss, because I wanted to take advantage of what probably will be a fairly short-lived spike in the price of oil, assuming tankers can resume travel through the Strait of Hormuz. It felt good to do this, since while I accept that other index funds in our portfolio have holdings tied to oil and gas production, GSG was blatantly tied to the price of crude oil, and I believe in reducing greenhouse gas emissions.

What made me feel even better happened today: using the proceeds from the sale of GSG to buy shares in DFSPX (DFA International Sustainability Core 1 Portfolio). We have other Dimensional Fund Advisor index funds, though DFSPX is an actively managed fund. Claude says about this fund:

What it is: DFSPX is a Dimensional Fund Advisors fund launched in 2008, seeking long-term capital appreciation by investing in equity securities of developed international markets. It has an ESG/sustainability focus in its stock selection and holds about 3,704 securities, making it very broadly diversified.

Google AI explains what ESG stands for:

• Environmental (E): Focuses on a company’s impact on the planet, including carbon emissions, waste management, renewable energy use, and natural resource conservation.
• Social (S): Examines how a company manages relationships with employees, suppliers, customers, and communities, covering topics like labor practices, diversity, and human rights.
• Governance (G):
  Concerns a company’s leadership, auditing, internal controls, shareholder rights, and executive compensation.

So I’ve traded in a fund heavily weighed toward crude oil for a fund that is committed to buying shares of companies that are dedicated to reducing carbon emissions and fostering renewable energy.

I was surprised at how good it felt to click on the “Buy” button today and know that DFSPX now was part of our investments rather than GSG. This just fits much better with who my wife and I are.

Early on we bought an electric car, a Nissan Leaf, that had a range of less than 100 miles. We leased three Chevy Volts after the Leaf left our hands. My wife drives a Toyota RAV4 plug-in hybrid. I plan to get a plug-in hybrid fairly soon. We just replaced our less-efficient heat pumps with Daikin inverter heat pumps that use considerably less electricity.

We aren’t environmental fanatics, or GSG never would have been part of our investments. But when the opportunity came to dump GSG for a sustainability/ESG fund, this was a delight. It’s never too late to live more fully by one’s ethical standards. It took a while to do this with GSG, but at least it finally happened.