Just Add an 'M': The 'EMSG' Take on ESG Investing | ETF Trends

Amid expectations of a global economic recovery, emerging markets assets are rebounding and more investors are getting in on the action.

They can join the party in environmental, social, and governance (ESG) fashion with the Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (EMSG). EMSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI Emerging Markets ESG Leaders Index.

“Investors have recently favored emerging market stocks over the those in the U.S. That is a reflection of their confidence in the global economy’s recovery, given that those stocks typically perform well when growth picks up steam,” reports Jacob Sonenshine for Barron’s. A net $5.7 billion flowed into emerging market stocks this week, according to Bank of America strategists.”

Emerging Markets Are Rebounding and ESG Is Already In Gear

EMSG’s underlying index is a capitalization weighted index that provides exposure to companies with high ESG performance relative to their sector peers. Investors should consider the importance of accessing high ESG ratings, which leads to stronger performance overall.

“These capital-flow and price moves reflect a global economy that is bouncing back from the pandemic. Covid-19 vaccine distributions are beginning to make it possible for businesses to reopen, while government spending in much of the world has kept cash levels high for households and small businesses,” according to Barron’s. “The effect is that there is likely to be pent-up demand for the goods and services reopening business can offer. The knock-on effect could be a virtuous cycle of rehiring and increasing consumer spending.”

EMSG 1 Year Performance

An investment that considers sustainability isn’t about necessarily changing the world. It’s about understanding how the world is changing. ESG investments try to address issues such as water scarcity, tax transparency, rising sea levels, infectious diseases, privacy & data security, regime stability, air pollution, an aging population, and more.

EMSG is an ETF for advisors to especially consider in conversations with younger clients. Those demographics are big adopters of ESG investing.

Millennials could have net worth up to the $20 trillion range, and 95% of millennials have shown intentions to allocate to responsible investments. Additionally, $22 trillion is expected to pass from baby boomers to millennials over the next 25 years. Lastly, female investors are twice as likely as their male counterparts to consider sustainability alongside return when investing.

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