Climate control is just one aspect of the multi-faceted environmental, social and governance (ESG) investing trend, and FlexShares has four funds that cater to this niche.
These funds are the FlexShares ESG & Climate US Large Cap Core Index Fund (FEUS), the FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (FEDM), the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (FEIG), and the FlexShares ESG & Climate High Yield Corporate Core Index Fund (FEHY).
The introduction of equities has already been a prevailing part of the ESG trend, but fixed income is now following suit. However, finding funds that address both asset classes specifically in the climate control arena can be a trying task.
“That’s why FlexShares has developed a new suite of ESG-oriented ETFs. Each of the four funds targets a different core equity or fixed-income asset class,” a Flexshares Fund Focus said. “All employ our sophisticated, proprietary risk-assessment methodology to seek an overall improvement in the portfolio’s ESG score, with additional emphasis on reducing carbon risk versus the benchmark. These improvements are designed to have minimal tracking error, so they can help deliver the market exposures that investors expect from their core investments.”
Creating the Vector Score
ESG analytics is becoming a growing field as the investing space grows even larger. The availability of this raw ESG data has helped FlexShares develop a scoring methodology to help pick out the best investments.
“The ESG Vector Score is designed to focus on ESG-related business issues most likely to impact a company’s financial performance — and ultimately, a portfolio’s investment return,” the Fund Focus said. “Our scoring methodology employs a framework established by the Sustainable Accounting Standards Board (SASB), that identifies 26 categories of general sustainability issues that affect company performance,” the Fund Focus said. “Then, SASB determined which of those issues are most relevant to a particular sector or industry.”
The economic impact of climate change is a top-of-mind concern to a number of investors, and now they have four funds to address this topic.
“We appreciate that climate change is a top concern among many companies, investors and regulators around the world,” the Fund Focus added. “Each strategy in our core ESG ETF suite incorporates a special focus on carbon risk in addition to other components of the overall ESG score.”
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