Environmental, social and governance (ESG) investing is already becoming a global phenomenon. In the Middle East, green bonds that fund special ESG projects are gaining high interest from investors, which should only increase the popularity of the space.
“Egypt pulled in orders for nearly five times the $750 million size of the Middle East and North Africa’s first sovereign green bond, as it pushes ahead with anti-pollution and renewable energy projects,” a Bloomberg Green article said. “The Arab world’s most populous nation sold the five-year notes at a yield of 5.25%, well inside an opening target of about 5.75%, after amassing more than $3.7 billion of investor orders. The sale ‘put Egypt on the map of sustainable financing,’ the Finance Ministry said.”
Furthermore, “among those attracted were a ‘new investor base from Europe, the U.S., East Asia and the Middle East, as well as asset mangers, pension, investment and insurance funds,’ the ministry said in a statement. Such ‘high-quality,’ long-term investors ‘will reduce price volatility,'” the report added.
Where can ETF investors find quality ESG funds? Here are a few to consider:
- iShares ESG Aware MSCI USA ETF (ESGU): seeks to track the investment results of the MSCI USA Extended ESG Focus Index. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents. The underlying index is optimized index designed to reflect the equity performance of U.S. companies that have favorable environmental, social and governance (“ESG”) characteristics (as determined by the index provider), while exhibiting risk and return characteristics similar to those of the MSCI USA Index (the “parent index”).
- iShares MSCI KLD 400 Social ETF (DSI): seeks to track the investment results of the MSCI KLD 400 Social Index composed of U.S. companies that have positive environmental, social and governance characteristics. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. The underlying index is a free float-adjusted market capitalization index designed to target U.S. companies that have positive environmental, social and governance (“ESG”) characteristics.
- FlexShares STOXX Global ESG Impact Index Fund (CBOE: ESGG): ESGG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global ESG Impact Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to environmental, social, and governance characteristics relative to the STOXX® Global 1800 Index, a float-adjusted market-capitalization weighted index of companies incorporated in the U.S. or in developed international markets. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.
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