For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with Nick Cherney, the Head of ETFs at Janus Henderson, about the latest ESG news coming in the form of ETFs and portfolios strategies.
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“We’re pretty excited,” Cherney states, with Janus Henderson having recently launched five actively managed sustainable ETFs. “I think we have a bit of a unique approach to the space, and we’ve seen a huge amount of investor interest increasing overall in ESG.”
From Cherney’s perspective, he feels the area has been a bit lacking in terms of products, based on what he’s heard from clients. With this launch, he feels investors will get more of what they are looking for as far as ESG-related products that fit more cleanly in their portfolios.
“It’s great to showcase what we’ve been doing here for a long time but without a U.S.-centric offering in the area,” Cherney adds.
Having been in the space for a while, Cherney notes the Global Sustainable Equity Fund (SXUS), one of the oldest in sustainable ESG funds. However, as noted, with investors catching up, there’s been a fundamental shift in thinking about how to include ESG in portfolios. It seems to sit in minds to both do good and have a sound investment strategy in place.
Applying ESG Expertise
Janus Henderson has also put in a serious effort to take the core expertise seen in many areas of the firm and bring it all together. Cherney explains how there’s been an effort to build a robust platform focused on bringing ESG to the investor. This has been a project for years in the making.
Regarding how Janus Henderson sees ESG differently, Cherney notes how the market has been broken into two camps. The traditional ESG shops have focused on this area for a long time and are experts in evaluating some of the complex issues around ESG investing. On the other hand, areas such as returns and building actively managed portfolios can beat the benchmark on a risk-adjusted basis. This can come from investing in good companies.
So, the idea is to bring good companies and good investing strategies together, which has led to a lot of project growth and development. Unfortunately, this is in the passive space, compared to the potential of ESG, which can be fully utilized by venturing outside of the sort of comfort zone established by tradition and a reliance on well-known good companies.
Cherney adds, “There’s a lot more work that needs to go into that, and that’s what we’re trying to bring to bear – some of the nuance and complexity that come from having impactful and sustainable investment strategies.”
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