Environmental, social, and governance (ESG) investing and sustainable investing are two distinct styles, but the former can take on principles of the latter, indicating there’s a potentially wide array of exchange traded funds with at least some sustainable properties. That’s meaningful at a time when, despite myriad challenges hindering growth stocks, investors remain fond of both ESG and sustainable funds. Count the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG) and the Invesco ESG Nasdaq 100 ETF (QQMG) as among the potential beneficiaries of those trends.
Members of the Invesco Innovation Suite, both QQJG and QQMG turned a year old on Thursday, indicating that over the long haul, the duo may prove to be among the ETFs launched in 2021 with the best timing.
“U.S. sustainable fund flows snuck back into positive territory, as sustainable funds netted a modest $459 million during 2022′s third quarter. This comes on the heels of the first quarter of outflows in more than five years, weighed down by fears of recession, inflation, rising interest rates, and a global energy crisis,” noted Morningstar analyst Alyssa Stankiewicz.
In other words, while the traditional energy sector ranks as the best-performing group in the S&P 500 this year and growth stocks are faltering, investors remain committed to allocating a portion of their portfolios to sustainable assets. That could be a positive for QQMG and QQJG.
The Invesco ETFs aren’t dedicated sustainable funds. As their names imply, they’re broader approaches to ESG investing at large. However, owing to each ETF’s tech/growth profile, both are homes to some companies with direct inroads to renewable energy and other sustainability virtues.
Renewable energy/clean technology exposure is relevant because that’s a favored category among market participants embracing sustainability.
“Sustainable index-based funds bounced back into positive territory, netting $1.5 billion during the period. This is a brighter picture than their second-quarter outflows but still well below their average quarterly intake of $8 billion over the past three years,” added Stankiewicz. “Clean energy/tech funds, which investors fled in the second quarter, were among the top flow-getters in 2022′s third quarter.”
Adding to the allure of QQJG and QQMG as indirect plays on sustainable investing themes is the point that many investors choose to get into this space via broader funds, which is exactly what the Invesco ETFs are.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
