Nowadays, investors have a plethora of options when it comes to environmental, social and governance (ESG) investing. For those looking for ESG exposure on a global scale, one fund worth considering that tracks leaders in the space is the Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (ACSG).
ACSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI ACWI ex USA ESG Leaders Index (the “underlying index”). The fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities from countries other than the United States.
The underlying index is a capitalization weighted index that provides exposure to companies with high environmental, social, and governance (“ESG”) performance relative to their sector peers. MSCI ACWI ex USA ESG Leaders Index consists of large and mid cap companies across 22 Developed Markets (DM) and 24 Emerging Markets (EM) countries.
Additionally, the Index is designed for investors seeking a broad, diversified sustainability benchmark with relatively low tracking error to the underlying equity market. The index is a member of the MSCI ESG Leaders Index series. Constituent selection is based on data from MSCI ESG Research.
As stated earlier, the MSCI All Country World Index (ACWI) ex-USA is a market-capitalization weighted index designed to provide a broad measure of stock performance throughout the world by tracking the performance of 22 developed and 24 emerging markets. The fund also features a paltry 0.16% expense ratio compared to a category average of 0.37% per Yahoo Finance numbers.
The fund’s top 10 holdings (as of June 29) include a mix of equities from various parts of the globe, including household names in China and Taiwan:
- Alibaba Group Holding Ltd-SP: ADR 3.77%
- Tencent Holdings Ltd (CN): 3.38%
- Taiwan Semiconductor Manufacturing: 2.44%
- Roche Holding AG-Genusschein: 2.27%
- ASML Holding N: 1.43%
- SAP SE: 1.35%
- Novo Nordisk A/S-B: 1.07%
- Glaxo Smith Kline PLC: 0.96%
- Shopify Inc: 0.90%
- Total SA: 0.89%
While there are still detractors that say ESG could pose as nothing more than a financial fad, a number of other market experts are only forecasting further growth for the space.
“We expect increased investor focus on ESG considerations after COVID-19, with particular demand for greater corporate transparency and stakeholder accountability,” UBS said in a recent note to clients, per a CNBC article. “The crisis underscores the relevance of ESG considerations to company performance and investment returns, and we expect that this will continue to influence corporate and investor actions going forward,” the firm added.
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