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ESG ETFs to Gain on Rising Popularity Amid the Coronavirus Crisis
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There has been growing awareness about environmental, social and governance (ESG) among companies marked by continued technological advancement and digital revolution. Moreover, since the pre-pandemic period, investors appear to be bothered about the future of the environment and the effect it might have on their portfolios as ignorance of environmental issues by companies may result in them facing lawsuits, fines and damages.
This ETF investing area has shown some resilience and continues to gain investor attention during the coronavirus pandemic. Going by Morningstar Direct’s data, investors had spent at least $12.2 billion on ESG funds in the first four months of 2020, per The Wall Street Journal report. The report also highlights the resilience of ESG funds’ performance which mostly generated better-than-average returns in comparison to the broader S&P 500 index. Going by the report, more than 70% ESG funds across all the asset classes generated greater returns than their counterparts throughout the first four months of 2020. Furthermore, Bank of America Merrill Lynch research report states that ESG stocks have outperformed the S&P 500 by five percentage points between Feb 19 and Mar 25, which was the sharpest period of index decline.
Going on, a Wall Road Journal evaluation of ESG fairness funds also found that around 150 of about 200 funds surpassed the common return of a fund’s broader class, per The Wall Street Journal report. George Serafeim, a Harvard Enterprise College professor’s comment “this disaster has proven that ESG investing is right here to remain—ESG just isn’t a fad” highlights ESG funds’ popularity amid the coronavirus crisis, per The Wall Street Journal report.
ESG ETFs in Focus
Below we discuss a few ETFs that seek to provide exposure to ESG investing:
The fund seeks similar risk and return to the MSCI USA Extended ESG Focus Index, while achieving more sustainable outcome. The fund provides exposure to higher rated ESG companies while accessing large and mid-cap U.S. stocks. The fund has 307 holdings with AUM of $6.82 billion. It charges 15 bps in fees.
The fund tracks investment results that correspond generally to the performance of the MSCI USA ESG Leaders Index. Notably, the MSCI USA ESG Leaders Index provides exposure to companies with high ESG performance relative to their sector peers. The fund has 311 holdings, with AUM of $1.82 billion. The fund charges 10 bps in fees (read: Ride the Thematic Investing Trend With These ETFs).
The fund tracks the performance of the FTSE US All Cap Choice Index comprising large, mid, and small-capitalization stocks. It does not include companies operating in adult entertainment, alcohol and tobacco, weapons, fossil fuels, gambling, and nuclear power industries. It also doesn’t consider companies not meeting U.N. global compact principles and diversity criteria. The fund has 1503 holdings, with AUM of $1.33 billion. It charges 12 bps in fees (read: Here's Why ESG ETFs Are Hot Amid Pandemic).
The underlying TIAA ESG USA Large-Cap Growth Index comprises large-cap equity securities and meets ESG criteria and exhibits overall growth style characteristics based on long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend and long-term historical sales per share growth trend. The fund has 140 holdings, with AUM of $210.4 million. It charges 35 bps in fees.
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ESG ETFs to Gain on Rising Popularity Amid the Coronavirus Crisis
There has been growing awareness about environmental, social and governance (ESG) among companies marked by continued technological advancement and digital revolution. Moreover, since the pre-pandemic period, investors appear to be bothered about the future of the environment and the effect it might have on their portfolios as ignorance of environmental issues by companies may result in them facing lawsuits, fines and damages.
This ETF investing area has shown some resilience and continues to gain investor attention during the coronavirus pandemic. Going by Morningstar Direct’s data, investors had spent at least $12.2 billion on ESG funds in the first four months of 2020, per The Wall Street Journal report. The report also highlights the resilience of ESG funds’ performance which mostly generated better-than-average returns in comparison to the broader S&P 500 index. Going by the report, more than 70% ESG funds across all the asset classes generated greater returns than their counterparts throughout the first four months of 2020. Furthermore, Bank of America Merrill Lynch research report states that ESG stocks have outperformed the S&P 500 by five percentage points between Feb 19 and Mar 25, which was the sharpest period of index decline.
Going on, a Wall Road Journal evaluation of ESG fairness funds also found that around 150 of about 200 funds surpassed the common return of a fund’s broader class, per The Wall Street Journal report. George Serafeim, a Harvard Enterprise College professor’s comment “this disaster has proven that ESG investing is right here to remain—ESG just isn’t a fad” highlights ESG funds’ popularity amid the coronavirus crisis, per The Wall Street Journal report.
ESG ETFs in Focus
Below we discuss a few ETFs that seek to provide exposure to ESG investing:
iShares ESG MSCI USA ETF (ESGU - Free Report)
The fund seeks similar risk and return to the MSCI USA Extended ESG Focus Index, while achieving more sustainable outcome. The fund provides exposure to higher rated ESG companies while accessing large and mid-cap U.S. stocks. The fund has 307 holdings with AUM of $6.82 billion. It charges 15 bps in fees.
Xtrackers MSCI USA ESG Leaders Equity ETF (USSG - Free Report)
The fund tracks investment results that correspond generally to the performance of the MSCI USA ESG Leaders Index. Notably, the MSCI USA ESG Leaders Index provides exposure to companies with high ESG performance relative to their sector peers. The fund has 311 holdings, with AUM of $1.82 billion. The fund charges 10 bps in fees (read: Ride the Thematic Investing Trend With These ETFs).
Vanguard ESG U.S. Stock ETF (ESGV - Free Report)
The fund tracks the performance of the FTSE US All Cap Choice Index comprising large, mid, and small-capitalization stocks. It does not include companies operating in adult entertainment, alcohol and tobacco, weapons, fossil fuels, gambling, and nuclear power industries. It also doesn’t consider companies not meeting U.N. global compact principles and diversity criteria. The fund has 1503 holdings, with AUM of $1.33 billion. It charges 12 bps in fees (read: Here's Why ESG ETFs Are Hot Amid Pandemic).
Nuveen ESG Large-Cap Growth ETF (NULG - Free Report)
The underlying TIAA ESG USA Large-Cap Growth Index comprises large-cap equity securities and meets ESG criteria and exhibits overall growth style characteristics based on long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend and long-term historical sales per share growth trend. The fund has 140 holdings, with AUM of $210.4 million. It charges 35 bps in fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>