Regular investors continue to desire ESG funds, despite some opponents labeling them as "woke" investing. These funds consider a portfolio's firms' financial fundamentals in addition to their environmental, social, and governance considerations.(Photo : by Austin Distel / Unsplash)
Regular investors continue to desire ESG funds, despite some opponents labeling them as "woke" investing. These funds consider a portfolio's firms' financial fundamentals in addition to their environmental, social, and governance considerations.
ESG Funds: What Are They?
Environmental, social, and governance (ESG) funds are exchange-traded funds or mutual funds with a specific theme that take these aspects into account when making investing decisions.
They develop their portfolios using a variety of techniques that integrate ESG criteria. Some actively seek for businesses with good ESG performance through positive screening. Others employ negative screening to weed out businesses engaged in contentious industries like fossil fuels, tobacco, or weaponry.
Selecting ESG funds may assist you in supporting businesses that place a high priority on sustainability, social responsibility, and good governance while also helping your investments match your beliefs. It's crucial to remember that ESG investment does not ensure higher financial results.
Here are the top ESG funds on the market right now to assist you in finding the ideal ESG funds for your portfolio and values.
American Century Sustainable Growth ETF (ESGY): This fund focuses on U.S. large-cap companies with strong ESG practices. It has a one-year return of 34.35% (as of May 2024) and a low expense ratio of 0.40%.
Invesco ESG NASDAQ 100 ETF (QQMG): This fund tracks the ESG version of the NASDAQ 100 index, which includes many of the largest and most well-known non-financial companies in the U.S. It has a one-year return of 31.67% (as of May 2024) and an expense ratio of 0.20%.
Nuveen ESG Large-Cap Growth ETF (NULG): This fund invests in U.S. large-cap growth companies that meet ESG criteria. It has a one-year return of 31.16% (as of May 2024) and an expense ratio of 0.30%.
ClearBridge Large Cap Growth ESG ETF (LRGE): This fund focuses on U.S. large-cap growth companies with strong ESG practices. It has a one-year return of 30.92% (as of May 2024) and an expense ratio of 0.46%.
Fidelity International Sustainability Index Fund (FNIDX): This fund invests in large-cap and mid-cap companies from developed and emerging markets outside of the U.S. that meet ESG criteria. It has a one-year return of 28.71% (as of May 2024) and an expense ratio of 0.40%.
Here are some things to keep in mind when choosing an ESG fund:
Your investment goals: Consider your investment time horizon, risk tolerance, and overall investment strategy.
The fund's ESG criteria: Different ESG funds focus on different environmental, social, and governance factors. Make sure the fund's criteria align with your values.
The fund's performance: Look at the fund's historical performance as well as its expense ratio.
The fund's holdings: You can usually find a list of the fund's holdings on the provider's website. This can help you get a sense of the types of companies the fund invests in.
The content provided on MoneyTimes.com is for informational purposes only and is not intended as financial advice. Please consult with a professional financial advisor before making any investment decisions.
