During this week’s “ETF Edge,” Dave Nadig, CIO and Director of Research at ETF Trends, and Phil Mackintosh, Nasdaq’s Chief Economist, speak on ESG (Environmental, Social & Governance) investment trends, and how recent social justice protests may change the game, with CNBC’s Bob Pisani.
While understandably tangential to ESG, Pisani asks Nadig to speak on the effect the recent protests could have on ESG, specifically the social and governance factors, as the environmental component seems to garner the most attention usually. As Nadig explains, there is enough to glean from this, which comes from advisors wanting to understand and stay informed.
“They want to understand how to present ESG to their clients.” Nadig states. “They want to be able to have that conversation. And the honest truth here is that there’s always a catalyst. The catalyst right now is what we’re seeing in terms of the Black Lives Matter movement, and the social unrest issues.”
While those have a focus, as Nadig explains, when talking about broad ESG funds, it’s important to point out these aren’t ‘one size fits all’ products. Some of these funds are very much market-like, with small tweaks. Others are particular to women in governance, or environmental causes, etc.
The important thing is that the interest is there, and people are seeing the flows for the first time. Like everything else, it’s necessary for advisors and investors to do the homework to understand whether these funds have values that should be projected through the investments, showing off how they’ve been captured given this strategy.
Mackintosh then follows up in regard to the same question by noting how, in relation to the market, the ideal is to have so much money chasing those good factors, because corporates want to project better factors and behave better. He notes how Europe is actually further along on that track, with a lot more ESG money tracking those funds.
Once this happens, a lot more people begin buying those stocks because they have good governance, social, or environmental policies, which is what the whole goal is, to begin with.
Watch Dave Nadig Discuss ESG and Protests on ETF Edge:
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