An ETF That Has America's Values in Mind Can Also Outperform

Socially responsible ETFs that follow environmental, social and governance principles are more than just a feel-good investment strategy. They also produce results.

“Companies and investors looking to gain an edge in today’s market should take a cue from the priorities of the American public,” Martin Whittaker, Chief Executive Officer of JUST Capital, said in a note. “A thoughtful, principled approach to business isn’t just the right thing to do – it makes good business sense.”

According to JUST Capital research, U.S. companies that try to uphold worker pay and treatment, customer experience, beneficial products, environmental impact, community support, job growth, and ethical leadership have cumulatively outperformed the Russell 1000 by 456 basis points, or 215 bp annualized, from November 2016 to September 2018.

The report analyzed companies in the JUST U.S. Large Cap Diversified Index , which acts as the underlying benchmark for the Goldman Sachs JUST U.S. Large Cap Equity ETF (NYSEArca: JUST), is based on the Russell 1000 benchmark and targets companies that score well on environmental, social and governance metrics.

To screen for its ESG-focused components, Just Capital conducts an annual survey taken from the American public and analyzes 120,000 data points across 85 unique metrics to score companies based on how they perform on key issues prioritized by the public. For instance, companies are ranked from worker issues, like providing a living wage and workplace safety; to customer concerns, such as privacy protection and truthful advertising; to environmental impacts, including minimizing pollution and resource efficiency. Companies are ranked by overall score, and the top 50% are selected and weighted by market cap.