It’s the recipient of much derision, but environmental, social, and governance (ESG) investing has plenty of supporters. It’s also piqued the interest of an increasingly large number of values-driven market participants, many of whom are new investors.
Those investors, plenty of whom are younger and part of the Millennial and Gen Z demographics, can be considered ESG-interested. They’re also in need of some ESG education and best practices for accessing this investment style. Enter exchange traded funds such as the Invesco ESG Nasdaq 100 ETF (QQMG ) and the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG ).
Both QQMG and QQJG provide investors, including newbies, with appropriate and tangible ways to access the sustainable investing umbrella while helping to clarify some of the confusion surrounding ESG investing.
“Under the sustainable umbrella you’ll find strategies that remove a few ‘bad actor’ companies from otherwise broad indexes, as well as funds that invest in companies they see as furthering a particular environmental goal, such as providing clean water,” reported Ryan Ermey for CNBC.
QQMG, QQJG -- ESG Options for New Investors
Speaking of ESG confusion, it lingers in the marketplace today. As this style of investing evolves, experts are pointing out important differences between ESG and sustainability, socially responsible investing (SRI), and impact asset allocation.
As noted above, ESG is broad. Sustainability often focuses on environmental and climate issues, while SRI can encompass some elements of ESG. It’s a lot for any investor, especially a novice, to digest. Those issues speak to the advantages of broad, efficient approaches such as those offered by QQJG and QQMG.
“Funds with an ESG framework typically seek to invest in companies that score highly on environmental, social and governance criteria. That typically means they’re working to reduce their environmental impact, treat employees and customers well, value corporate diversity and align their policies with the interest of shareholders,” according to CNBC.
Another benefit of QQJG and QQMG is that the point that these are passive funds adhering to index’s ESG methodology. That can minimize greenwashing. Conversely, some active fund managers may take liberties in an effort to position a fund as “ESG credible.” That can create scenarios in which there’s too much of a good thing or not enough ESG credibility.
Bottom line: More investors are interested in embracing ESG, but they need a foundation with which to do so. Some ETFs, including QQJG and QQMG, can provide that support.
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