Just like the capital markets with the growth of social investing and the introduction of digital assets, investors are also evolving. Speaking to the former, environmental, social, and governance (ESG) investing has grown exponentially, and there are exchange traded funds (ETFs) that can capture the trend while also providing exposure to growth.
The growth factor has certainly seen better days as more investors are cycling into value-oriented assets as inflation and recession fears run rampant. A volatile stock market is also affecting bonds, giving investors even more reason to seek the safe confines of value-based equities.
Meanwhile, investors are changing their views on where they allocate their capital. Whether they want to admit it or not, obtaining a return will always be first and foremost, but social investing is also taking priority.
Whether it’s lobbying for social justice, saving the environment, or other top-of-mind issues for the investor, the topics they care about are also entering their investment decisions. This, of course, is evident in the explosion of ESG-related products in the past few years.
These drivers of ESG can also intersect with the growth factor. Many companies are focused on innovation that could not only churn a profit, but save the environment as well — American Century has exchange traded products (ETPs) that cater to just that.
Growth and Sustainability in 1 ETF
When the growth factor returns, investors can also add the component of sustainability to their exposure. For a 0.39% expense ratio, this is all inherent in the American Century Sustainable Growth ETF (ESGY).
The fund is actively managed, giving investors peace of mind that the holdings in the fund are in the hands of professional portfolio managers. Per its fund description, ESGY seeks to provide a total return exceeding the benchmark over a market cycle by using a growth U.S. equity strategy that integrates environmental, social, and governance (ESG) factors into the investment process.
Benefits of ESGY per the product website:
- Invests in large-growth companies with improving business fundamentals and sustainable corporate behaviors.
- Combines quantitative and fundamental research from multiple sources to ensure exposure to companies with more attractive ESG characteristics.
- Utilizes a dynamic risk-management process focused on understanding and quantifying all portfolio risks.
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