- (1:10) - What Is Driving The Growth In ESG Investments?
- (7:10) - How Has ESG Investing Evolved?
- (14:50) - Do You Sacrifice Performance With ESG Investments?
- (18:05) - Does The Underperformance In Energy Benefit ESG?
- (21:20) - Breaking Down DWS’s Suite of ESG ETFs
- Podcast@Zacks.com
In this episode of ETF Spotlight, I speak with Amanda Rebello, head of passive sales at DWS Group, about ESG investing. DWS has a 25-year history of responsible investing and offers an excellent suite of ESG ETFs.
ESG funds, which hold companies with positive environmental, social and governance characteristics, are surging in popularity. In 2020, sustainable funds attracted a record $51.1 billion in net flows, more than twice the previous record set in 2019, per Morningstar. What is driving this growth?
ESG is not easy to define, and rating agencies use different definitions for sustainability. As one example, electric-car maker Tesla (NASDAQ:TSLA) TSLA is a top holding in many clean energy ETFs but not included in most ESG ETFs. Warren Buffett’s Berkshire Hathaway BRK.B also doesn’t get included in many ESG ETFs due to its low scores on corporate governance.
Many sustainable funds are invested in oil-and-gas companies, like Exxon XOM and Chevron CVX. It is important for investors to look under the hood of ESG funds and make sure that holdings align with their beliefs.
The Xtrackers S&P 500 ESG ETF SNPE invests in S&P 500 companied that meet the sustainability criteria and excludes companies involved in tobacco, controversial weapons, and thermal coal. Apple AAPL, Microsoft MSFT and Amazon AMZN are its top holdings.
In fact, tech giants get outsized allocations in most ESG ETFs. Did excellent performance of tech stocks and underperformance of energy over the past few years contribute to ESG popularity?We also discuss how Biden Administration's climate agenda will benefit ESG.
Tune into the podcast to learn more about the Xtrackers ESG suite that offers risk and returns quite similar to broad market indexes.
Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.
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