Despite myriad challenges this year, namely the deterioration of growth stock performance, investors remain enthusiastic about climate and green energy exchange traded funds. Data confirm as much, and plenty of related ETFs have come to market this year, including the SPDR MSCI USA Climate Paris Aligned ETF (NZUS).
NZUS, which follows the MSCI USA Climate Paris Aligned Index, debuted in April and has about $90 million in assets under management. That’s an impressive start considering this year’s turbulent market environment.
One reason NZUS could prove to be a successful new ETF is that investors prioritizing climate change, environmental, social and governance (ESG), and the like are typically committed to those principles. That’s an indication investors embracing a fund like NZUS are in it for the long haul.
“People putting money into esg believe the energy transition is not something that will happen over a couple of years, but a long-term trend that will mean their investments inevitably pay off,” reported The Economist. “Sustainably minded investors tend to be young and have decades-long investment horizons. They do not fret about a few years of poor performance.”
With an ETF such as NZUS, the stickier its assets are, the more likely it is to achieve long-term success. Fortunately, the fund has the right ingredients to realize that long-term potential. As its name implies, NZUS is a Paris-aligned investment — a relevant trait because more investors across a variety of demographics are aware of the Paris Climate Accords.
It’s not a stretch to say Paris-aligned investing is values investing. After all, climate investing is considered values investing, and those points could bode well for NZUS, particularly as more younger investors embrace values-based strategies.
“Social values give investors a non-pecuniary reason for allocating money and sticking with their choice, a rare advantage for funds in an industry where a competitive edge normally means lower fees,” according to the Economist.
Speaking of lower fees, NZUS answers that bell with aplomb as its annual expense ratio is just 0.10%, or $10 on a $10,000 investment. That’s among the lowest in the climate ETF category.
NZUS holds 293 stocks and offers investors positioning for a growth equity rebound, because the rookie ETF allocates nearly a third of its weight to the technology sector. Healthcare and financial services names combine for over 28% of the NZUS roster.
For more news, information, and strategy, visit the ESG Channel.
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.