There are plenty of environmental, social, and governance (ESG) exchange traded funds for investors to evaluate, but as more capital flows into this ETF segment, asset allocators are increasingly focusing on simplicity and easy-to-understand investment objectives.
Not all ESG ETFs check those boxes. One that does is the Invesco ESG Nasdaq 100 ETF (QQMG). QQMG’s DNA is part of the reason that the fund is an attractive option for investors looking for a straightforward ESG approach. QQMG follows the Nasdaq-100 ESG Index, which, as its name implies, is the ESG derivative of the renowned Nasdaq-100 Index (NDX).
QQMG’s heritage and simplicity are relevant at a time when ESG is under intense scrutiny. In fact, some experts recommend shifting to “sustainability” as the preferred descriptor for this investment style.
“Sustainability may not mean exactly the same thing to everyone, but most people have positive feelings toward the term,” said Morningstar analyst Jon Hale. “(That’s why critics avoid using it.) Sustainability has been defined as meeting our own needs without compromising the ability of future generations to meet their own needs. I think of it as a societal goal that broadly aims for us to coexist and prosper on planet Earth over a long time. Sustainable decision-making is not limited to what is in our own narrow self-interest, but it considers an extended sphere of stakeholders, and not only people, but the planet.”
When it comes to environmental sustainability, QQMG easily checks that box. The Nasdaq-100 Index historically features light to non-existent allocations to the energy, materials, and utilities sectors — groups that can potentially be home to ESG offenders. Rather, nearly 62% of QQMG’s holdings are tech stocks — a sector that often sports favorable sustainability traits.
Home to 96 stocks, QQMG currently has no exposure to those sectors. In other words, QQMG is an ideal option for investors searching for an efficient approach to large-cap growth stocks while dodging sectors that can run into environmental controversies.
“At the individual level, more of us are making both everyday and life decisions with sustainability in mind—consumer decisions, career decisions, lifestyle and locational decisions, political decisions—and so it should come as no surprise that those who are fortunate enough to be investing increasingly want to make their investment decisions with sustainability in mind,” concluded Hale.
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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.
