ESG Still Popular, But Money Managers Have Concerns

Global money managers are still somewhat enthusiastic about ESG investing and continue using those principles in securities evaluation. But conquering the issue of greenwashing remains a top priority.

That’s the take from the Association of Investment Companies (AIC). In a new survey, the AIC noted that 53% of global investors are considering ESG investing this year. Should that percentage hold steady going forward or matriculate back to levels seen over the past couple of years, exchange traded funds such as the Invesco ESG Nasdaq 100 ETF (QQMG) stand to benefit.

Within the expansive universe of ESG ETFs, QQMG has the potential to set itself apart from the pack owing to multiple attractive factors. Those include a roster teeming with high-quality growth stocks and solid credentials to be leveraged in the fight against greenwashing.

Speaking of Greenwashing…

QQMG’s ability to steer investors clear of greenwashing isn’t just credible. It’s relevant right now as confirmed by the AIC survey.

“Among the 47% of investors who do not consider ESG factors when investing, the top reason given is that these investors prioritize performance over ESG issues. However, not being convinced by ESG claims from asset managers is a close second,” according to the research firm. “A majority of all respondents (63%) say they are concerned about greenwashing, and it appears these fears have grown.”

The ability of QQMG to be a sanctuary away from greenwashing is important. Why? Because greenwashing is widely viewed as the primary culprit behind waning enthusiasm for ESG investing.

“There is plenty of residual support for the concept. But concerns about greenwashing are increasingly dominating private investors’ mindsets,” noted AIC CEO Richard Stone.

Another point to consider with QQMG is that many investors, including those who are ESG-interested, grew frustrated by the poor performances of ESG stocks and ETFs last year. That was largely a symptom of rising interest rates. This indicates that if the recent surge in bond yields abates and inflation continues cooling, funds such as QQMG could be set up for success in 2024.

In other longer-ranging good news for QQMG, some market participants remain committed to ESG.

“A year ago I was 100% committed to performance. I now increasingly consider the wider world and wish to make more of a contribution if only by example,” one investor told the AIC.

For more news, information, and analysis, visit the ETF Education Channel.