We believe that one of the biggest challenges financial advisors often face with ETF investors is the latter's belief that ESG investing only needs to be a small part of their portfolios. Often, they're unconvinced that ESG is an optimal core option, preferring other more “traditional" choices.
Attracting ESG investors means understanding their mindset and their investor profile. Generally speaking, we believe that ESG investors are savvy people who are purpose-driven in all they do, including where they entrust their money.
ESG (environment, social, governance) investing has rapidly moved from the fringe of investing to the mainstream. It's hard to go to an investing conference without seeing one or more sessions about ESG investing on the agenda. Major ETF and fund companies are rolling out new ESG products to meet demand among investors, institutions, and advisors. Here are some ESG trends to consider:
We believe that many of today's investors are seeking investments that put their hard-earned dollars into ETF portfolios that reflect their convictions about important social issues. They connect most with brands that apply ESG — or environmental, social, and governance considerations — in their daily operations.
Many investors may seek out investor-centric firms that provide advisors with investments that recognize those convictions and values. Some may even expect advisors to help them construct portfolios that achieve this purpose-driven aspect of their investment strategy.
For some investors, considering environmental, social or governance (ESG) factors as part of the investment process may be based upon more than a desire to “do good." Investors will sometimes use key performance indicators (KPIs), which are quantitative and qualitative metrics reported by public companies as part of their regulatory filings, which demonstrate how effectively a company is achieving its business objectives, which often include ESG considerations. ESG in our opinion is as much about managing risk and boosting investment returns as it is about any altruistic motivations.
Key performance indictors (KPIs) are quantitative and qualitative metrics reported by public companies as part of their regulatory filings. Many KPIs relate to ESG factors. As ESG investing continues to become more mainstream, investment managers have begun to use ESG-based KPIs as part of their screening process in building ESG indexes and funds. ESG-based KPIs span environmental, social, and governance factors. Here are some examples.
STOXX® Limited is a family of indexes created out of a joint venture between Dow Jones, Deutsche Boerse Group and SIX Swiss Exchange. Their indexes are widely used in Europe and globally, including in many ETFs. STOXX® licenses its indexes globally for commercial use.
ESG investing, or investing informed by facts about a company's environmental, social, and corporate governance policies and practices, is a hot topic in investing circles. ESG considerations have moved into the investing mainstream. How are investors, their advisors, and corporate managers integrating ESG factors?
Environmental, social, and governance (ESG) investing puts a new spin on an old concept: investing with a moral, ethical, or social bent.
Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
An investment in FlexShares is subject to numerous risks, including possible loss of principal. Fund returns may not match the return of the respective indexes. The Funds are subject to the following principal risks: asset class; commodity; concentration; counterparty; currency; derivatives; dividend; emerging markets; equity securities; fluctuation of yield; foreign securities; geographic; income; industry concentration; inflation-protected securities; interest rate / maturity risk; issuer; management; market; market trading; mid cap stock; natural resources; new funds; non-diversification; passive investment; privatization; small cap stock; tracking error; value investing; and volatility risk. A full description of risks is in the prospectus.