Among the driving forces of success for new exchange traded funds are timing and offering an investment concept that resonates with investors.
The Invesco ESG S&P 500 Equal Weight ETF (RSPE ), which is about two weeks old, checks those boxes. The equal-weight answer to the popular Invesco S&P 500 Equal Weight ETF (RSP ), RSPE comes to market as investors — both institutional and retail — are flocking to environmental, social, and governance (ESG) funds.
Year-to-date inflows into ESG ETFs and exchange traded products (ETPs) are easily on a record pace.
“Net inflows into Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally of US$ 130 billion which is 49% higher than the record full year 2020 net inflows,” notes ETFGI ETFs and ETPs listed globally gathered net inflows of US$11.25 billion during October, bringing year-to-date net inflows to US$130.28 billion which is much higher than the US$54.91 billion gathered at this point last year.”
As noted above, RSPE isn’t even a month old, so judging on the basis of inflows isn’t relevant at this point, though it has nearly $5 million in assets under management, indicating a decent start.
More important than heft is the fact that RSPE debuted as interest in ESG ETFs is accelerating and that it delivers a fresh spin on the successful equal-weight methodology. Tracking the S&P 500 Equal Weight ESG Leaders Select Index — the ESG answer to RSP’s underlying index — RSPE offers investors the benefits they’re used to with an equal-weight ETF with the ESG kicker.
While RSPE holds 185 stocks — far fewer than RSP — the new ESG ETF maintains comparable diversification benefits, minimizing single stock risk in the process. For example, Dollar Tree (NASDAQ:DLTR) is RSPE’s top holding at a weight of just 0.83%.
And, like many traditional equal-weight funds, RSPE has some value exposure, as stocks with the value label represent about 37% of the new fund’s weight. Those benefits and more can help RSPE stand out in a burgeoning field of ESG ETFs.
“The Global ESG ETF/ETP had 834 products, with 2,344 listings, assets of $361 Bn, from 170 providers listed on 40 exchanges in 32 countries. Following net inflows of $11.25 Bn and market moves during the month, assets invested in ESG ETFs/ETPs listed globally increased by 9.1% from $331 Bn at the end of September 2021 to $361 Bn at the end of October 2021,” concludes ETFGI.
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