It’s not hard to see that ESG investing is out of favor. The sustainably-oriented investing approach was already facing some important, unanswered questions before it became a battleground in U.S. politics. Still, like the post-hype sleeper in sports, it’s playing an important role in many portfolios, just under the radar. The ESG Growth ETF ESGY, nearing its three-year ETF milestone, presents the case for ESG investing that doesn’t miss on performance.
See more: Look to Steady Long-Term Performance in Quality Growth ETF QGRO
The American Century Sustainable Growth ETF (ESGY ) has returned 30.9% over one year per American Century Investments. According to VettaFi’s ETF Database, that outperforms both its ETF Database Category and Factset Segment averages. Intriguingly, that ETF Database Category, Large Cap Growth Equities ETFs, includes leading ETFs like the SPDR S&P 500 ETF Trust (SPY ).
The ESG Growth ETF tracks the Russell 1000 Growth index, applying a score to each security therein based on financials and ESG. The strategy’s managers combine those with an equal weighting scheme to create an overall score. Using internal and third-party data to evaluate ESG, the strategy ends up holding between 70 and 90 stocks.
That approach has helped ESGY perform as described above. So why consider it moving forward? Many investors still want some level of ESG or sustainability in their portfolio. Particularly younger investors coming into new assets may want strategies that avoid certain negative externalities. At the same time, however, investors want performance out of their strategies, too.
ESGY, then, could provide a great option for advisors working with clients in that category. Given the ongoing transition towards renewables, for example, the strategy’s combination of growth and ESG could take advantage. For those on the lookout for an ESG option that fits a growth mindset, ESGY may merit a closer look.
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