Despite what some naysayers may have you believe, using ESG screening in a core fund can be greatly beneficial. Take the Calvert US Large-Cap Core Responsible Index ETF (CVLC ), for example. The fund provides a core large-cap portfolio, using Calvert’s own ESG screening index.
CVLC’s top holdings illuminate how an ESG-screened portfolio can encompass a robust core fund. Among the largest holdings for the fund include mega-cap companies such as Microsoft, Apple, Nvidia, and Alphabet. CVLC’s portfolio is not limited to tech giants either — the fund’s assets also contain strong holdings in companies such as Eli Lilly and JP Morgan.
ESG Advantages
Even though ESG has taken some political flak over the last few years, institutional investors still support ESG’s value. The Hoover Institution’s 2024 Institutional Investor Survey on Sustainability highlights how institutional investors value the benefits of ESG strategies.
In particular, the survey finds that 78% of institutional investors believe ESG reduces tail risks, while 61% assert that it reduces volatility. Additionally, 43% of institutional investors believe ESG improves the Sharpe ratio for a portfolio.
The Hoover Institution’s data also highlights how investors continue to apply climate change as an environmental factor going into investment calls. Notably, the survey asserts “nearly all investors surveyed (93%) ranked climate issues as the most likely to affect the performance of investors over the next two to five years.”
CVLC’s fund flows serve as an excellent means to illustrate how investors haven’t given up on ESG. As of August 12, 2024, CVLC has seen more than $23 million in net flows over the last 12 months, according to ETF Database.
These strong flows are paired with compelling investment results. Data from Eaton Vance shows that CVLC’s NAV has risen over 20% within the last 12 months.
The benefits of ESG screening don’t simply stop at helping to enact positive climate progress, either. By using a climate-friendly core fund, investors can potentially profit off of climate-friendly legislation and innovation down the line.
This can prove especially beneficial for investors seeking a new addition to their core portfolio slots. CVLC can combine the benefits of reliable large-cap companies with the long-term benefits from climate-friendly business policies.
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