Environmental, social, and governance (ESG) investing is gaining considerable momentum, and issuers of exchange traded funds are meeting surging demand with a steady stream of new supply.
An expanding roster of ESG choices is beneficial for investors because it keeps issuers inventive and competitive on fees. For advisors, however, the dizzying array of ESG products can be burdensome. WisdomTree is easing that burden with a new suite of ESG model portfolios.
“Our ESG-focused Model Portfolios emphasize best-of-breed positive-impact ESG ETFs to create globally diversified equity and fixed income portfolios. The models surround an ESG-adherent core with satellites that capture differentiated ESG themes,” according to the issuer, which offers one of the industry’s deepest rosters of model portfolios.
The suite is comprised of three offerings – WisdomTree ESG All Equity and WisdomTree ESG Moderate and Aggressive – the latter two of which feature varying degrees of fixed income exposure.
Exploring the All Equity Sleeve
The WisdomTree ESG All Equity Model Portfolio is home to eight exchange traded funds, three of which are WisdomTree products. Those funds are the WisdomTree U.S. ESG Fund (RESP), formerly the WisdomTree U.S. Total Market Fund (EXT); the WisdomTree International ESG Fund (RESD), formerly the WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (DHDG); and the increasingly popular WisdomTree Emerging Markets ex-State-Owned Enterprises ETF (XSOE ).
As Scott Welch, WisdomTree chief investment officer – model portfolios – points out, those three selections accomplish important objectives for advisors using these portfolios.
Those ETFs focus on “sustainable water and agriculture, alternative energy, energy efficiency, pollution control and prevention, and green buildings,” said Welch, adding that the funds offer “exposure to global companies that help people prevent cardiovascular disease through healthier lifestyles and/or treatment.”
RESD, RESP, and XSOE also provide exposure to companies with strong records on gender pay equality and women’s rights.
RESD is a factor-based ETF that excludes U.S. and Canadian equities while RESP is also factor-based and holds domestic equities that screen well on a variety of ESG metrics.
Bottom line: advisors now have efficient avenues avenues for presenting ESG-driven portfolios to clients while avoiding blanket approaches that have often dominated sustainable investing.
“In constructing our ESG Models, we tried to integrate a broad-based approach with a more targeted thematic method that focuses on positive and impactful social and environmental objectives,” adds Welch. “We think this resulted in Models that are diversified at the asset class, risk factor and ESG levels, and that are well positioned for long-term capital appreciation.”
For more on how to implement model portfolios, visit our Model Portfolio Channel.