As investors look to shore up their portfolios for the new year, one of the enduring themes to consider is the ever-growing popularity of environmental, social and governance (ESG) investing. ETF investors can keep riding that wave into with funds like the SPDR S&P 500 ESG ETF (EFIV).
EFIV seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index that provides exposure to securities that meet certain sustainability criteria (criteria related to environmental, social and governance (“ESG”) factors) while maintaining similar overall industry group weights as the S&P 500 Index.
In seeking to track the performance of the S&P 500 ESG Index (the “index”), the fund employs a sampling strategy, which means that it is not required to purchase all of the securities represented in the index. Overall, EFIV gives investors:
- Investment results that, before fees and expenses, correspond generally to the S&P 500 ESG Index.
- Exposure to an index that is designed to select S&P 500 firms meeting certain sustainability criteria (criteria related to environmental, social and governance factors) while maintaining similar overall industry group weights as the S&P 500 Index.
- Potential ESG core exposure, based on its focus on sustainability criteria and comprehensive market coverage of the flagship core S&P 500 Index.
For the cost-conscious investor, getting exposure to ESG won’t come at a high premium with EFIV. Access to the funds only requires a net expense ratio of 0.10%.
COVID-19 Can’t Stop ESG
The pandemic may have put a stranglehold on the capital markets, especially back in March, but the ESG space was able to mute the effects of the downturn. As such, ESG has been one of the few bright spots in 2020 and should continue shining through to 2021.
“Alex Dunnin describes the coronavirus pandemic as a grand real-time experiment on the effectiveness of environmental, social, and governance (ESG) investing,” said a Financial Review article. “And so far, investment managers who put their funds into companies which follow environmental, social and governance principles have outperformed non-ESG funds as sharemarkets were hit by the impact of the global pandemic, says Dunnin, executive director of research & compliance at finance sector research house Rainmaker.”
“The EGS sector has passed that test with flying colours, because as we go through this massive shake-up and turmoil, it turns out ESG is a pretty good investment solution for bad times as well as good,” says Dunnin.
For more news and information, visit the ESG Channel.