Investing in ESG principles is a good way to help manage portfolio risks. Academic research reveal that strong governance mechanisms have helped diminish default risk and lower bond yields. Barclays also recently discovered that investment-grade bonds with higher ESG scores outperformed those with low ESG scores over the past 8 years.
“We’re excited about the launch of our first Beta Advantage funds. We believe that these types of strategies have the potential to help advisors and their clients meet important investment goals, such as generating income, growing assets and managing volatility,” Colin Moore, global chief investment officer at Columbia Threadneedle Investments, said in a press release.
The Columbia Beta Advantage ETFs will start with a MSCI benchmark and screen for dividend yields above 1% and ESG-scores above BB. The underlying indices will also implement a multi-factor model based on income related metrics and quality metrics. Lastly, the end resulting portfolio will weight components by dividend yield and the multi-factor-model score.
ESGS targets U.S. stocks excluding real estate investment trusts. ESGN include international developed market stocks excluding U.S. equities. Lastly, ESGW includes both U.S. and international stocks.
For more information on new fund products, visit our new ETFs category.