Whether it’s environmental, social, and governance (ESG) or more nuanced climate-aware and sustainability-focused strategies, the good news for investors in 2021 is that many of these strategies evolved.
That is to say, many of the exchange traded funds residing in these categories are becoming more relevant and focused. Those descriptions apply to the Goldman Sachs Future Planet Equity ETF (GSFP).
GSFP debuted earlier this year, and its rookie status should be seen as more advantage than deterrent because the Goldman Sachs exchange traded fund arrives as investors are demanding more from sustainability-charged investments.
“It’s important to look under the hood to understand the details of any sustainable fund you are considering, particularly now that there are more than 500 open-end and exchanged-traded sustainable funds available to U.S. investors,” says Morningstar analyst Jon Hale.
That’s astute advice because many established ESG funds, even some climate-focused strategies, are sprawling funds that do more than overweight some sectors and limit or exclude others. Once upon a time, that was a relevant approach, but times are changing.
“Sustainable investing is connected to bigger-picture global changes. We are moving from an era in which most investors were OK with public companies making money for them while also generating negative social or environmental consequences, to one in which investors increasingly expect companies to make money while avoiding such costs or generating positive impacts,” adds Hale.
Related to that, GSFP member firms develop products and services in demand by companies looking to boost their environmental profiles while limiting environmental impact. That’s a vast end market with a lengthy runway for growth.
One thing investors should be mindful of is their expectations. In other words, don’t get too excited or too down about a sustainable fund’s performance, particularly over short-term horizons.
“Having reasonable expectations for any type of investment is important for investor success. For sustainable investing, keep in mind that it includes a range of still-evolving approaches, so it’s important to look under the hood of any sustainable fund to make sure it aligns with your expectations,” concludes Hale.
As an actively managed fund, GSFP has the flexibility to evolve with the times and can provide investors with a more flexible approach to sustainable investing at a time when that trait is in high demand.
For more news, information, and strategy, visit the Future ETFs Channel.
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.