Among environmental, social, and governance (ESG) exchange traded funds, the Invesco ESG S&P Equal Weight Fund (RSPE) is one of the new kids on the block, but rookie status shouldn’t be a deterrent when considering this fund.
RSPE, which launched last November, could be the beneficiary of good timing because it arrives on the ESG ETF scene as assets are flowing to these products in significant fashion, confirming that investors are keen on implementing ESG in their portfolios.
While the impressive growth forecasts ascribed to ESG ETFs are mostly derived from expectations that institutional investors will continue allocating to these funds, the impact of retail investors on the ESG fund landscape shouldn’t be overlooked.
“Half of retail investors are planning to switch some of their investments including pensions into ESG investments this year as the focus on ethical investing continues to intensify,” according to new research from Oxford Risk. “Its research found 50% of investors intend to move some of their funds including pensions into ESG this year with one in seven (14%) planning to move 60% or more of their funds.”
Using the well-established equal-weight methodology, RSPE could leverage the fact that it’s a departure from the typical cap-weighted ESG ETF to attract more investors. Additionally, RSPE’s pedigree — it’s the ESG answer to the popular Invesco S&P 500 Equal Weight ETF (RSP) — along with its status as an Invesco product could be useful traits over the long haul.
“Oxford Risk’s study found 41% of investors believe the ESG credentials of advisers and wealth managers are important when it comes to the investment advice they offer. Around a quarter (24%) however say ESG credentials are unimportant when rating investment advice,” notes the research firm. “Those figures are likely to change over the next two years – 42% questioned believe ESG credentials will become even more important to help wealth managers win business compared with just 4% who say ESG will become less important.”
RSPE holds 182 stocks, none of which exceed an allocation of 0.96%. Adding to the potential allure of the fund going forward is that its underlying index is easy for advisors to convey to clients, but also data-rich, showing that investors are getting anything but a run-of-the-mill ESG ETF.
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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.