The coronavirus pandemic is proving to be an optimal proving ground for environmental, social, and governance (ESG) ETFs and that’s good news for the FlexShares STOXX US ESG Impact Index Fund (CBOE: ESG) and the FlexShares STOXX Global ESG Impact Index Fund (CBOE: ESGG).
Environmental, social, and governance (ESG) investing has been anything, but all sizzle and no steak. The ESG space has been outperforming even amid the Covid-19 pandemic and is actually helping to further catapult the space into the limelight.
“Interest in sustainable investing has grown tremendously in recent years, and our research has shown that this applies to most investors, regardless of gender or age,” writes Morningstar analyst Samantha Lamas. “Given this rise in popularity, a growing number of asset managers and public companies are making sustainability-focused changes.”
Examining Ideas
ESG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® USA ESG Impact Index. The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to ESG characteristics relative to the STOXX® USA 900 Index, a float-adjusted market-capitalization weighted index of U.S.- incorporated companies. Under normal circumstances, the fund will invest at least 80% of its total assets in the securities of the underlying index.
“Some believe that interest in environmental, social, and governance investing is fickle and will dwindle when the going gets rough. In our research, we have found that interest in ESG investing can take the heat,” writes Lamas.
ESGG seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global ESG Impact Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to environmental, social, and governance characteristics relative to the STOXX® Global 1800 Index, a float-adjusted market-capitalization weighted index of companies incorporated in the U.S. or in developed international markets. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.
“Research suggests that even during a pandemic and extreme market volatility, investors continue to be interested and swayed by ESG information. In other words, interest in ESG investing is not going anywhere, and investment professionals would be well-served by incorporating it into their practices,” according to Lamas.
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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.