On a seemingly monthly basis this year, inflows to environmental, social, and governance (ESG) exchange traded funds topped previous records, providing support for funds such as the Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST).
November brought further confirmation of advisors’ and investors’ increasing affinity for ESG funds, which could spark more interest in JUST in 2022.
“Assets invested in Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally reach a record US$371 billion at the end of November. ESG products gathered net inflows of US$16.63 billion during November, bringing year-to-date net inflows to US$146.84 billion which is much higher than the US$68.59 billion gathered at this point last year,” notes ETFGI.
For its part, JUST stands out in a crowded field of ETFs, many of which employ similar methodologies. Many prosaic ESG ETFs simply exclude sin stocks (like alcohol, tobacco, and gambling) and fossil fuels producers.
Conversely, JUST offers an evolved methodology. JUST Capital, JUST’s index provider, scours 145,000 data points across 88 unique metrics, offering investors a modern approach in a fund category that, while new, already needs refreshing. JUST isn’t change for the sake of change. Rather, its unique approach is important at a time when the ESG ETF population is expanding and investors are demanding fresher ideas.
“The Global ESG ETF/ETP category had 872 products, with 2,468 listings, assets of $371 Bn, from 177 providers listed on 40 exchanges in 32 countries,” adds ETFGI. “Since the launch of the first ESG ETF/ETP in 2002, the iShares MSCI USA ESG Select ETF, the number and diversity of products have increased steadily. During November, 33 new ESG ETFs/ETPs were launched.”
JUST also answers the often-asked question about ESG ETF performance. Year-to-date, the Goldman Sachs fund is beating the widely followed Russell 1000 Index by more than 100 basis points. Adding to the allure of JUST is the fact that while it employs an array of metrics, its approach is straightforward, which is relevant at a time of ample confusion about ESG funds.
“Confusion persists around what constitutes an ESG fund. According to PRI, a UN-supported initiative that seeks to understand the investment implications of ESG issues, 56% of adopters believe there is a lack of clarity in ESG definitions. ETFGI’s classification system attempts to provide greater precision, with ETFs/ETPs listed globally organized into categories,” concludes ETFGI.
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