There is amount of criticism aimed at environmental, social, and governance (ESG) investing. Given that, it’s not a stretch to assume many infer the strategy and the related ETFs are falling by the wayside.
In reality, that’s not the case. Actually, some experts believe the opposite is true and that long-term outlook for adoption of ESG strategies remains compelling. Some data points support those claims and that’s good news for ETFs such as the Invesco ESG Nasdaq 100 ETF (QQMG ) and the Invesco ESG Nasdaq Next Gen 100 ETF (QQJG ).
Of note to advisors considering ETFs such as QQJG and QQMG is the fact while backlash and criticism targeted at the strategy intensified over the past several years, data courtesy of the Institute for Energy Economics and Financial Analysis (IEEFA) indicate the funds continue adding assets while delivering solid performances.
QQJG, QQMG Still Relevant
Given the critiques, some end users may be apt to assume products such as QQJG and QQMG are losing relevance. In what could be seen as a positive for the Invesco funds, the opposite appears to be true.
“ESG continues to grow and remain relevant. The performance of ESG funds and ETFs has matched or surpassed traditional funds/ETFs over most time periods, and regulators continue to focus on climate change risks, and on improving standards and disclosures to assess and mitigate these risks,” noted the IEEFA.
Regional trends should be observed, too. While US-listed ESG ETFs have seen some outflows, that’s not the case in Asia and Europe. Regulators in other corners of the world are making strides when it comes to bringing clarity to ratings and scoring. Should the U.S. follow suit, it’s possible that more advisors and investors will renew their affinity for the funds.
Additionally, large market participants are deploying ESG strategies and sustainability as part of their overall investment evaluation process. That could signal to advisors and retail investors that there is enduring validity in ESG investing.
“Large asset owners, such as sovereign wealth funds and pension funds, are increasingly integrating ESG and climate considerations into their investment processes and decision-making. They use the Paris Agreement to identify sustainability outcomes, prioritize collaborative engagements, provide regular reporting on climate and ESG issues, and implement and evaluate sustainable investments,” concluded the IEEFA.
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