As has been widely noted, there are various interpretations regarding environmental, social, and governance (ESG) ratings, meaning there can be elements of opinion in what constitutes a “good ESG stock,” such as IQSU.
On the other hand, there are some irrefutable traits when it comes to ESG stocks, and the IQ Candriam ESG US Large Cap Equity ETF (IQSU) is one of the exchange traded funds that’s home to a healthy helping of some of the best equities from the perspective of ESG.
On Monday, Investor’s Business Daily revealed its 2022 rankings of top ESG equities, and a fair amount of those names across multiple sectors and industries are IQSU member firms.
“To determine the 2022 100 Best ESG Companies list, we started with companies’ environmental, social, and governance (ESG) sustainability scores created on Aug. 24 by Dow Jones Newswires, an IBD affiliate. The scored list numbered 2,208 U.S.-traded companies. On Aug. 31, IBD then cut the list to 1,693 companies, removing nonpublic companies and companies with stock prices below $10 a share. We also removed any companies that lacked sufficient data to create an IBD Composite rating,” according to the publication.
Technology stocks account for 35.2% of IQSU’s roster, which isn’t surprising because that sector frequently looms large in large-cap ESG funds. Apple (NASDAQ: AAPL), IQSU’s largest holding, is among IBD’s top ESG tech stocks. So are International Business Machines (NYSE: IBM) and Texas Instruments (NASDAQ: TXN), both of which are IQSU member firms.
IQSU is relevant in terms of other ESG themes. Investors new to this style of investors may not realize that traditional utilities are increasingly important in the renewable energy conversation. As such, some score well on the ESG front. According to IBD, one such example is Dominion Energy (NYSE:D). That utility is also an IQSU holding.
On a related note, while ESG ETFs, including IQSU, often sport growth profiles, these funds can and do feature some conservative sector positioning. That includes consumer staples – a sector with plenty of credible ESG stocks.
According to IBD, the top three ESG stocks from the consumer staples sector are Dow component Coca-Cola (NYSE: KO), Mondelez International (NASDAQ: MDLZ), and Pepsico (NASDAQ: PEP). That trio combines for about 2.3% of the IQSU portfolio.
The weighted average market value of IQSU’s 345 holdings is $536.7 billion. The fund turns three years in December.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.