With so much focus on healthcare these days, it’s been a winner for environmental, social, and governance (ESG) funds that have been able to capitalize on the increasing trend amid the pandemic. Healthcare has always been a safe investment play, but these days, it’s giving investors plenty to cheer about in terms of gains—just ask ESG funds.
“The most popular S&P 500 health-care stocks owned by actively managed sustainable equity funds outperformed the least popular names in recent years, according to a study by RBC Capital Markets,” a Barron’s article noted. “The widely held names tended to have better risk scores on environmental, social, and governance, or ESG, issues as measured by Sustainalytics, than stocks in conventionally managed funds, according to Sarah Mahaffy, U.S. Equity Strategist at RBC Capital Markets.”
One ETF to consider is the Xtrackers MSCI USA ESG Leaders Equity ETF (NYSE Arca: USSG), which was developed in collaboration with Ilmarinen, Finland’s largest pension insurance company. The expense ratio for USSG is 0.10%, which is well below the average cost of 0.39% for ESG funds, making it ideal for investors who are also seeking a low-cost solution to add ESG to their portfolios.
While ESG ETFs are still vying for market share in the ETF space, it appears to be progressing with the advent of new products meeting demand. In fact, sustainability is one DWS’ four core values, not only from an investment perspective but also as a financial market participant.
USSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI USA ESG Leaders Index. In order for companies to be included in the fund, the methodology includes a comprehensive screener that filters out alcohol, weapons, gambling, and other controversial products or activities.
A Healthcare Technology Play
Another fund to consider is the Robo Global Healthcare Technology and Innovation ETF (HTEC). HTEC seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ROBO Global Healthcare Technology and Innovation Index.
The fund will normally invest at least 80 percent of its total assets in securities of the index or in depositary receipts representing securities of the index. The index is designed to measure the performance of companies that have a portion of their business and revenue derived from the field of healthcare technology, and the potential to grow within this space through innovation and market adoption of such companies, products, and services.
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