Adding ESG to Tomorrow’s Story Stocks | ETF Trends

Accessing a basket of stocks with the potential to be the next batch of legendary names is always exciting for investors.

Adding the benefits of environmental, social, and governance (ESG) principles makes the endeavor even better, and the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG) is the exchange traded fund with which to accomplish that objective.

QQJG, which debuted last October, follows the Nasdaq Next Generation 100 ESG Index — the ESG offshoot of the Nasdaq Next Generation 100 Index. For the uninitiated, the Nasdaq Next Generation 100 Index is the junior varsity of sorts for the widely followed Nasdaq-100 Index (NDX). That lineage is important because NDX has a lengthy history of topping rival broader benchmarks, such as the S&P 500 and the Russell 1000 Index.

“When creating ESG products, our exchange-traded fund (ETF) team partners with ESG-savvy index providers to design indexes that identify and weight securities according to meaningful ESG metrics. And then we create ETFs to give all types of investors easy access,” according to Invesco.

QQJG is a new ETF, but more importantly, it’s a pioneer, because while it’s easy to find growth funds offering ESG exposure, it’s not as easy to find ESG funds focusing on the next generation of growth stars like QQJG does.

“Invesco and Nasdaq are pioneers in innovative solutions, partnering together to help people access the world’s most innovative companies. Today, that combined innovation continues, as we strive to help investors achieve their evolving goals,” adds Invesco.

QQJG’s ESG approach is easy to explain. The fund excludes sin stocks from the alcohol, cannabis, gambling, and tobacco industries, as well as firearms manufacturers, nuclear power companies, and fossil fuels producers. Those qualifiers actually make it easy for the QQJG portfolio to be constructed because many companies in those groups, even the mid-cap names, wouldn’t meet the growth parameters necessary to be considered an innovative stock.

Speaking of innovation, QQJG keeps with the tradition of its forefathers, meaning that it’s significantly overweight to technology stocks. The fund allocates over 44% of its weight to tech, while the consumer cyclical and healthcare sectors combine for 28.62% of the fund’s roster.

Like the large-cap NDX, QQJG doesn’t feature exposure to financial services stocks. The fund also has no exposure to energy and utilities stocks. None of its 87 holdings exceed a weight of 3.14%.

For more news, information, and strategy, visit the Nasdaq Investment Intelligence Channel.

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.

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