Investing
Why ESG Investing May Become Problematic With Overlaps and Redundancy
July 9, 2019 8:35 am
Last Updated: January 11, 2020 7:59 am
FlexShares STOXX US ESG Impact Index Fund
> Year-to-date gain: 19.9%
> Year-over-year gain: 12.4%
The FlexShares STOXX US ESG Impact Index Fund (ESG) is a passively managed ETF managed by Northern Trust. It has a 0.32% expense ratio and only $48.1 million in assets under management. This ETF tracks the STOXX U.S. ESG Impact Index and has 286 holdings. While the ETFdb.com weightings differ slightly from the FlexShares own website, both sites do show that Exxon Mobil is on the mix here, which will not stand out as a typical ESG theme at all.
The ETF’s top 15 holdings by weighting are as follows:
iShares MSCI ACWI Low Carbon Target
> Year-to-date gain: 17.7%
> Year-over-year gain: 6.0%
The iShares MSCI ACWI Low Carbon Target ETF (CRBN) is not a carbon-cleaning index but now is it made up of companies that are only tied to cleantech or green energy. It has a 0.20% expense ratio and $460 million in assets under management. By tracking the MSCI ACWI Low Carbon Target Index, the global fund’s focus is companies focused on carbon emissions, which screens companies for greenhouse emissions. With some 1,275 equity holdings from around the globe, its top 15 by weighting were shown as follows:
Some investors may choose to look for other funds that are outside of traditional ESG index-tracking models that seek to accomplish some of the same goals.
ARK Innovation
> Year-to-date gain: 28.5%
> Year-over-year gain: 9.3%
The ARK Innovation ETF (ARKK) tracks disruptive innovation and includes companies with technologically enabled new products or services that potentially change the way the world works. They rely on or benefit from the development of new products or services and technological improvements coming from scientific research, DNA/genomics, industrial innovation in energy, automation and manufacturing, as well as from the increased use of shared technology, infrastructure and services. It also includes technologies making financial services more efficient via fintech.
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