The Milken Institute recently hosted a global conference that saw executives from a variety of industries speaking on major concerns they are seeing within investing, reported Pensions & Investments. Environmental, social, and governance topics kept popping up in multiple panels as executives discussed the role they play for investing and also as a recognition of their growing importance.
An economic think tank, the Milken Institute offers research and hosts conferences that help to connect the financial world to important socio-economic issues of the day. The general consensus amongst the executives that spoke on the topic was that ESG investing remains complicated for a variety of reasons, and that there isn’t a one size-fits-all for investors, but that instead the method for engaging with EGS funds depends on the priorities of individual investors.
Some executives, such as Scott Minerd, CIO of Guggenheim Partners, discussed the limitations that divestment funds and approaches can have. When the strategy is simply not engaging, funding can be eliminated for a company that is working to reduce their carbon emissions.
Martin Flanagan, president and CEO of Invesco, was clear that his firm is ready to be supportive and helpful as the energy sector works to transition to renewables, and that he believes divestment investing isn’t the correct approach to ESG.
Flanagan recognizes that ESG is an ever-evolving area and that the financial industry is still working to find its own best practices. He believes that within three to five years, ESG will be part of the normal set of factors considered when investing instead of the outlier it currently is.
ESGY Invests in Companies Working Towards ESG Goals
The call for corporations to implement and follow ESG practices is an increasingly larger pressure from investors.
The American Century Sustainable Growth ETF (ESGY) invests in large companies that are practicing sustainability and working towards measurable ESG goals.
ESGY is a non-diversified fund that invests in large-cap companies with large growth and value potential that also rank highly on ESG metrics, and it is actively managed.
ACI’s proprietary model assigns a score to each security for financial metrics as well as a score for ESG metrics, both of which are then combined. The highest overall scoring securities are selected within each sector, creating a portfolio with strong performance and higher ESG ratings than the stocks in the Russell 1000 Growth Index.
The fund is a semi-transparent ETF, meaning that allocations are disclosed on a quarterly basis, not daily. As of its last quarterly rebalancing, its top sectors by weighting were information technology at 47%, consumer discretionary at 18%, communication services at 11%, and healthcare at 10%.
ESGY has a total annual fund operating expense of 0.39%.
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