Investors looking to invest with a purpose can find an increasing number of options in the smart beta space thanks to the rise of environmental, social and governance (ESG) exchange traded funds. That group includes the Oppenheimer Global ESG Revenue ETF (NYSEArca: ESGF).
ESGF tries to outperform the MSCI All Country World Index with strong ESG practices and re-weights companies based on revenue earned. MSCI ESG Research utilizes a proprietary ESG scoring system and screens companies based on Sharpe Ratio, a measure of risk-adjusted performance.
As a global ETF ESGF includes U.S. stocks, but its exposure to international markets is significant. That could be an advantage for the fund heading into 2018 as many ex-US markets remain attractively valued. ESGF’s price-to-book ratio is 1.79.
“It is clear that the U.S. equity market is certainly not inexpensive. But valuation, both when it’s attractive and unattractive, is not a reason for buying or selling in and of itself. Investors need a catalyst. Currently, the catalyst for looking outside of the United States may be found in recent improvements in economic data. Manufacturing activity outside of the United States seems to have been steadily improving since the midpoint of last year,” according to Oppenheimer research published earlier this year.
ESGF tries to outperform the MSCI All Country World Index with strong ESG practices and re-weights companies based on revenue earned. MSCI ESG Research utilizes a proprietary ESG scoring system and screens companies based on Sharpe Ratio, a measure of risk-adjusted performance.