As cutting emissions and reaching carbon neutrality become increasingly prominent parts of the corporate investment landscape, market participants are looking for ways to put an affinity for carbon reduction into practice.
A variety of exchange traded funds accomplish that objective, but some offer more unique approaches than others, while featuring the diversification investors crave to boot. Take the case of the Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST).
The $253.39 million JUST, which recently turned three years old, follows the JUST U.S. Large Cap Diversified Index. One compelling trait of the fund’s methodology is its depth – one that expands well beyond just scouring environmentally-conscious companies.
“JUST Capital collects and analyzes data from a diverse range of sources, utilizing over 145,000 data points across 88 unique metrics to score the performance of Russell 1000 Index companies across a variety of issues, including worker treatment, customer concerns and environmental impacts,” notes Goldman Sachs Asset Management (GSAM).
While JUST isn’t a dedicated environmental ETF or a renewable energy fund, the inclusion of some environmental standards in its index structure makes it a relevant idea in the current climate.
“Carbon has become an extremely important investment theme. The proportion of funds launched in the past five years with the word ‘Carbon’ in their name has more than doubled compared with the previous five years and from 2016 to 2020, global sustainable investment has grown by 55%,” said UBS in a recent report.
The UBS report also notes how investors focusing on carbon-friendly investments don’t necessarily leave returns on the table.
“We found that investors could drastically cut their average carbon intensity without underperforming the benchmark in most regions, and in Europe a low carbon intensity portfolio would have strongly outperformed,” according to the bank.
Over the past year, JUST performed in line with the S&P 500, though it’s home to fewer stocks than the benchmark equity gauge. The Goldman Sachs ETF holds 451 stocks and charges just 0.20% per year, or $20 on a $10,000 investment.
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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.