For this week's episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with Rene Reyno, Head of Thematic and Specialty Product Strategy at Invesco, about the recently launched ESG ETF, $GBLD, and what this fund focuses on.
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With ESG ETFs continuing to gain traction and matching investing and values, Reyna addresses the level of surprise he has in seeing this much embrace for ESG. Primarily in how the U.S. is finally putting itself somewhere close to where the EU has already been for so long. It's exciting to see investors get educated and adopt these strategies into their portfolios.
The other exciting part comes from seeing ESG being adopted by multiple investor demographics. High net worth investors, institutions, and younger investors are all taking this in. It's allowed for many opportunities in this space.
Reyna states how there are many options in meeting the wildly different needs of so many different kinds of investors. As a lot of Invesco's strategies go back over ten years, Reyna explains that a lot of the strategies pre-date the ESG trends seen today. So, really, what's being offered to the marketplace is exposure to the climate, which will continue to evolve.
It's Earth Day
Looking at this new portfolio and focusing on how the Invesco MSCI Green Building ETF (GBLD) fits in ESG space, Reyna explains how the climate sustainability theme has evolved and there's excitement over some of the policy that has taken place. Things like the U.S. looking to regain leadership by re-joining the Paris Accord and taking on decarbonization by way of buildings.
"If we look globally around buildings," Reyna states, "They generate around 40% of global emissions. And if you look at more urbanized areas, that can be closer to 70%. So, to have a serious conversation around the topic, green buildings have to be included. What we're excited about is bringing the first strategy of its kind to market that's going to target exposures globally to this theme - green buildings."
Reyna continues, "I think over time, you're going to see an evolution. You're going to see existing buildings starting to be retrofitted to be more compliant with the green metrics that exist. And you're going to see new buildouts that also incorporate some of these green themes as well."
As far as what can be seen in the new portfolio, Reyna notes that it is global in nature. There's going to be around 25% for U.S. companies. The remaining balance is going to be international. Asia is the primary and continually evolving growth center for these buildings. Regarding the portfolio, there will be property companies, construction companies, and consulting services. All of these are areas looking to embrace the ESG standards.
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