Count actively managed environmental, social, and governance (ESG) fund managers among the professional investors that are looking to boost exposure to the scorching hot artificial intelligence (AI) theme.
It’s a sensible move not only because many AI and AI-adjacent stocks are soaring, but also because many of these companies had strong ESG credentials prior to this year’s AI renaissance. Before it was fashionable, some exchange traded funds offered investors the combination of AI exposure and ESG principles. That group includes the Invesco ESG Nasdaq 100 ETF (QQMG ).
As a large-cap growth fund, QQMG has obvious ESG credibility, with or without that label because many companies in the large-cap growth arena have been pioneers in terms of corporate-level adoption of ESG principles.
Nvidia and More Highlight QQMG AI Resume
QQMG turns two years old in October, and thanks to Nvidia (NVDA), the Invesco fund had AI credibility before that was a coveted trait.
""Nvidia Corp.’s":https://www.bloomberg.com/quote/NVDA:US stratospheric ascent has lured at least 100 more ESG funds in recent weeks, transforming the company into one of the most popular stocks among asset managers who integrate environmental, social and governance metrics into their investment strategies,” reported Lisa Pham for Bloomberg. “There are now over 1,400 ESG funds directly holding Nvidia, according to data compiled by Bloomberg based on the latest filings. A further 500 are indirectly exposed, the data show. Nvidia shares hit a record high this week, bringing gains so far in 2023 to about 200%.”
Bloomberg data indicate that Nvidia is now more prominent in ESG funds than electric vehicle behemoth Tesla (TSLA). Those two stocks are the third- and fourth-largest QQMG holdings, respectively.
Fortunately for AI-enthused investors, QQMG’s exposure to the theme doesn’t begin and end with Nvidia. Microsoft (MSFT) and Alphabet (GOOG) are two of the leading names in the generative AI field, and those stocks combine for over 17% of the QQMG portfolio. Broadcom (AVGO), another chip maker with AI exposure, is also a top-10 holding in the ETF.
The AI/ESG intersection could serve another benefit. It could lure more investors to this style while easing some of the regulatory scrutiny ESG investing is facing.
“ESG’s growing exposure to tech — and in particular artificial intelligence — has the potential to change the narrative around an investment strategy that last year suffered a number of headwinds,” according to Bloomberg.
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