When Nuveen came to market with its first set of environmental, social, and governance exchange traded funds five years ago, the initial conversations with clients around those products “were really explaining what the acronym ESG meant,” according to Jordan Farris, managing director, product management and development, global equities and ETFs at Nuveen. Now, five years later, advisors have moved beyond just what the acronym means and are “really understanding what ESG integration means.”
“We’re getting a lot of questions asked of us about the index methodology beyond what ESG just means in terms of that acronym,” Farris told VettaFi editor-in-chief Lara Crigger for “ETF Leaders, powered by the New York Stock Exchange.” “And we’re seeing them have more advanced and deeper conversations with their clients. That is my barometer for where the movement is; it’s to the point where people are fully integrating this into their portfolio and being able to tilt to different areas of ESG integration.”
While the conversation around ESG five years ago was very much, "What does ESG mean,” nowadays, Farris feels “like a kid in a candy store” because he and his team “get to be talking about individual securities within the portfolio.”
“Why is this company included from an ESG perspective? Why is the governance score what it is relative to some of their peers? What are the underlying metrics going into that? Why have you included carbon emissions reductions criteria into the index methodology? Those are the types of advanced conversations that we’re having now versus five years ago,” Farris explained at Exchange: An ETF Experience 2022.
Active Discussions
Farris added that Nuveen is also beginning to have good conversations with its clients over the firm’s suite of active semi-transparent ETFs that were launched last year. Just as their initial discussions with clients over ESG were about the basics of the product, Nuveen’s initial conversations about these ETFs were “about the slight differences” between “an active semi-transparent ETF versus a traditional transparent ETF.” Now that “those conversations have started to go down,” Nuveen “can move on to talking about the underlying investment strategy.”
While Farris admits that he loves the firm’s “suite of ESG ETFs,” as “they were the first products that [Nuveen] brought to market,” one ETF that he highlighted is the Nuveen Dividend Growth ETF (NDVG ), which is one of the firm’s “flagship active equity strategies.” According to Farris, NDVG offers “investors exposure to companies that are growing their dividends, with the thesis being that these types of companies have been able to produce good total returns with lower volatility over time.”
Another key feature of this fund is that “dividend growers tend to perform quite well during periods of inflation.”
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