Environmental, social, and governance (ESG) investing is reaching new heights in its popularity even amid the Covid-19 pandemic. Now, the big players are primed to enter the market like JP Morgan who is specifically looking to make a move in the green bond game.
“JP Morgan Chase & Co. entered the green-bond world on Wednesday, offloading the bank’s first set of bonds specifically to fund projects with a sustainability bent,” a MarketWatch article noted. “While the banking giant has arranged debt with an environmental or social-good purpose for its clients and other companies, this was JP Morgan’s first $1 billion forays into issuing such bonds on its own behalf.”
JP Morgan’s foray into ESG is looked at as a plus by market experts. The space as primarily a niche market, but has quickly ballooned into a thriving industry that is attracting heavy hitters in the capital markets like JP Morgan.
“Many investors welcomed the move, not only because of the weight JP Morgan JPM, 0.52% carries in the market as the nation’s biggest U.S. bank by assets, but also because of a growing acceptance within the U.S. that a climate crisis threatens both environmental and financial instability,” the article added.
“The more the larger players come along, the larger the scale to move things along faster,” said Steve Liberatore, Nuveen’s lead portfolio manager for environmental, social, and governance (ESG) criteria and impact investments.
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.
An additional fund to look at is the Xtrackers MSCI USA ESG Leaders Equity ETF (NYSE Arca: USSG), which has been a popular play for investors seeking exposure to socially responsible investments. USSG was developed in collaboration with Ilmarinen, Finland’s largest pension insurance company. The underlying MSCI USA ESG Leaders Index provides exposure to large- and medium-cap U.S. companies with high ESG performance relative to their sector peers.
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