Getting environmental, social and governance (ESG) exposure has proven its mettle even amid the coronavirus pandemic. Even as economies around the world begin to reopen their doors, investors can gain exposure to ESG as equities indexes continue to recover, such as the S&P 500—that’s where the Xtrackers S&P 500 ESG ETF (SNPE) comes into play.
One thing that SNPE has going for it is the rise of ESG and it doesn’t look like it will slow down anytime soon. Unlike fashion, ESG doesn’t look to be a passing fad.
“Globally, more and more investors are putting their money in sustainable investments,” wrote Aron Szapiro in Morningstar. “In the United States, mutual funds focused on sustainable investing attracted more than $20 billion in assets in 2019, more than four times the flows in 2018. And investor interest in sustainable funds has been even higher in Europe, with more than EUR 35 billion in new net assets each year since 2016. In 2019, fund flows reached a new record for European-domiciled funds of EUR 120 billion, according to Morningstar data.”
“And this is not a trend that is separate from mainstream investing,” Szapiro added. “Rather, conventional investors are increasingly incorporating analysis of environmental, social, and governance, or ESG, factors into their process.”
SNPE seeks investment results that correspond generally to the performance, before fees and expenses, of the S&P 500 ESG Index. The index is a broad-based, market capitalization weighted index that provides exposure to companies with high environmental, social and governance (“ESG”) performance relative to their sector peers while maintaining similar overall industry group weights as the S&P 500 Index. The fund uses a full replication indexing strategy to seek to track the underlying index.
Taking a closer look at SNPE’s holdings, it has a nice mix of technology household names—a must in the current market environment as a heavy reliance on tech is apparent given the number of countries implanting lockdown restrictions and social distancing measures. Continued reliance on tech will continue as people adjust to the coronavirus pandemic.
Here are the fund’s top holdings as of July 2:
- Microsoft Corp: 7.88%
- Apple Inc: 7.47%
- Amazon.com Inc: 6.10 %
- Facebook Class A: 2.83%
- Alphabet Class A: 2.22%
- Alphabet Class C: 2.16 %
- Visa Inc-Class A Shares: 1.66 %
- Procter & Gamble Co: 1.51%
- JPMorgan Chase & Co: 1.42%
- UnitedHealth Group Inc: 1.42%
- Home Depot Inc: 1.35%
At a paltry 0.11% expense ratio, SNPE also offers ESG exposure at a low cost. For more information on the fund, click here.
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