Target ESG While Stocks Rally | ETF Trends

Stocks rallied Tuesday morning after the latest consumer price index revealed inflation to be slowing down. The CPI rose 0.1% in November after increasing 0.4% in October; the index increased 7.1% over the last 12 months.

After the Labor Department released the report, the Dow Jones Industrial Average gained 521 points, or 1.5%, while the S&P 500 rose 2.3% and the Nasdaq Composite went up 3.2%.

“That was a big surprise and markets are reacting accordingly,” Steve Sosnick, chief strategist at Interactive Brokers, told CNBC. “Stocks love the story of a less restrictive Fed and the dollar is weaker which also helps stocks.”

In addition, this is occurring while the pace of mutual funds and ETFs with an environmental, social, and governance focus has been growing year-over-year. “Of the products on the market as of June, about 24% were ESG-integration funds, 48% were negative-screen funds and 28% were sustainability-themed funds,” according to ESG Clarity. “By comparison, about 29% of the funds in 2020 were ESG integration, 49% negative screening and 22% sustainability themed.”

Citing data from Cerulli Associates, ESG Clarity noted that U.S. ESG-themed funds could surpass $1 trillion in assets in 2025, reaching roughly $1.3 trillion by the end of 2027. By then, 43% of estimated assets would be ETFs, up from nearly 21% at the end of 2021.

For investors looking to incorporate ESG into their portfolios while stocks are on the rise, Xtrackers has a suite of ESG-themed U.S. equity ETFs, including the Xtrackers S&P 500 ESG ETF (NYSE Arca: SNPE), the Xtrackers S&P 500 Growth ESG ETF (SNPG), and the Xtrackers S&P 500 Value ESG ETF (SNPV).

SNPE seeks investment results that correspond generally to the performance of the S&P 500 ESG Index, which is designed to measure the performance of securities meeting sustainability criteria while maintaining similar overall industry group weights as the S&P 500.

Meanwhile, SNPG and SNPV, which were launched last month, seek investment results that correspond generally to the performances, before fees and expenses, of the S&P 500 Growth ESG Index and the S&P 500 Value ESG Index, respectively. The S&P 500 Growth ESG Index and the S&P 500 Value ESG Index are broad-based, market capitalization-weighted indexes that provide exposure to companies with high ESG performance relative to their sector peers, while maintaining similar overall industry group weights as the S&P 500 Growth Index and the S&P 500 Value Index, respectively.

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