Exchange-traded fund (ETF) provider powerhouse BlackRock is ready to double down when it comes to environmental, social, and governance (ESG) investing. BlackRock CEO Larry Fink said the company would begin implementing more ESG-tilted endeavors, including more sustainability screeners as well as heading for the exits on certain fossil fuel investments.
It’s hard to blame Fink’s latest move given the way ESG has performed during the first quarter, even when it was riddled with sell-offs from the pandemic in March.
“In the first quarter of 2020, we have observed better risk-adjusted performance across sustainable products globally, with 94% of a globally-representative selection of widely-analyzed sustainable indices outperforming their parent benchmarks,” BlackRock said in a 401k Specialist article.
Investors who want ESG exposure via an ETF wrapper can take a look at the Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG). EASG seeks investment results that correspond generally to the performance of the MSCI EAFE ESG Leaders Index.
The fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of the underlying index. The underlying index is a capitalization-weighted index that provides exposure to companies with high ESG performance relative to their sector peers.
A few more funds to consider from iShares:
- iShares MSCI Global Impact ETF (SDG): seeks to track the performance of the MSCI ACWI Sustainable Impact Index, which is composed of positive impact companies that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals.
- iShares MSCI USA ESG Select ETF (SUSA): seeks to track the investment results of the MSCI USA Extended ESG Select Index composed of U.S. companies that have positive environmental, social, and governance characteristics as identified by the index provider. The underlying index is an optimized index designed to maximize exposure to favorable ESG characteristics, while exhibiting risk and return characteristics similar to the MSCI USA Index.
- iShares ESG MSCI USA ETF (ESGU): seeks to track the investment results of the MSCI USA Extended ESG Focus Index. The underlying index is an optimized index designed to reflect the equity performance of U.S. companies that have favorable ESG characteristics (as determined by the index provider), while exhibiting risk and return characteristics similar to those of the MSCI USA Index (the “parent index”).
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