In a perfect world, U.S. presidents wouldn’t affect how advisors and investors select ETFs. But that perfection is hard to find. Just ask issuers of environmental, social and governance (ESG) ETFs.
In what was arguably an odd twist of fate for ETFs like the Invesco ESG Nasdaq 100 ETF (QQMG ) and the Invesco ESG Nasdaq Next Gen 100 ETF (QQJG ), those products seemed to have more momentum in terms of adoption during President Trump’s first term in office than during President Biden’s term. Obviously, Trump is back, and some impact investing experts say that’s renewing interest in ESG investing.
Whether the renewed appetite for ESG assets is solely the byproduct of Trump being in the White House again is up for debate. But if it proves to be a credible catalyst, it arrived at a good time for issuers of ESG ETFs.
“Preference for ESG investing fell slightly in 2023, from 48% to 46%, amid increasing political and financial scrutiny. While those under age 40 are still perceived as the most passionate group regarding ESG-related issues, just 66% still prefer ESG-aware investing (down from 72% from the year before), marking a second straight year of declining interest,” according to a February report from Cerulli Associates.
Political Climate Could Benefit QQMG, QQJG
QQMG and QQJG debuted in October 2021. So it’s a fool’s errand to speculate as to how the ETFs would’ve performed during Trump’s first term. For the bulk of Biden’s term, the ETFs delivered impressive performances. But that was the result of growth stocks soaring in 2023 and 2024.
While the occupant of the Oval Office may or may not directly affect ESG returns, some experts believe the president can have an impact on enthusiasm for this style of investing. Looked at differently, expectations that the Trump Administration could be hostile to ESG initiatives may be all the motivation some investors need to revisit ESG ETFs such as QQJG and QQMG.
“Several heads of impact- and ESG-focused firms told WealthManagement.com that interest in their practices had jumped (by varying degrees) since Trump’s inauguration in January,” reported Patrick Donachie for the publication.
As WealthManagement.com reported, some dedicated ESG money managers and impact investing firms experienced increases in client interest and inflows during Trump’s first term. Should that history repeat, it could be to the benefit of QQJG and QQMG over the next three-plus years.
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