As an investing style, environmental, social, and governance (ESG) incurred significant controversy and criticism over the past few years. And while some ESG funds suffered outflows last year, there’s evidence some of the most vocal critics of ESG are taking it easy for now. Those and other factors could augur well for exchange traded funds such as the Invesco ESG Nasdaq 100 ETF (QQMG).
QQMG follows the Nasdaq-100 ESG Index — a benchmark that is the ESG cousin of the venerable Nasdaq-100 Index (NDX). That’s a relevant point for investors not only because it confirms that QQMG is home to some of the most beloved large- and mega-cap growth stocks, but because the ETF has offered returns in line with or in excess of NDX since its October 2021 debut.
In other words, with QQMG, ESG-enthused investors don’t leave returns on the table simply to deploy ESG within their portfolios.
Why ESG ETF QQMG Matters Today
There’s no denying that the ETF industry at large is incredibly competitive and the ESG segment is one of the epicenters of those battles. That implies competing funds need to be able to stand out. QQMG checks that box and that’s meaningful because data indicates many market participants still want ESG exposure.
“Individual investor interest in sustainability is on the rise, according to survey findings in a new ‘Sustainable Signals’ report by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Wealth Management,” noted the research firm. “More than three quarters (77%) of individual investors globally say they are interested in investing in companies or funds that aim to achieve market-rate financial returns while also considering positive social and/or environmental impact.”
There are signs ETFs such as QQMG could be in for broader adoption in the years ahead. Morgan Stanley also pointed out that 57% of investors say their interest in sustainable investment strategies has increased over the past two years, while 54% see themselves boosting exposure to ESG/sustainable funds.
Increasingly, market participants believe it’s possible to, at the very least, gain returns that are in line with major equity indexes via ESG funds. QQMG confirms that’s possible, and that the potential exists for upside in excess of standard benchmarks.
“Nearly 80% of individual investors believe that it is possible to balance market rate financial returns with a focus on sustainability,” noted Jessica Alsford, Morgan Stanley’s chief sustainability officer and CEO of the Institute for Sustainable Investing. “These investors express a desire for their investments to advance positive environmental and social impact, creating opportunities for finance professionals to meet these needs.”
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