Combine the popularity of environmental, social, and governance (ESG) investing with innovative research in sustainable investments to get one dynamic fund in the IQ Candriam ESG US Equity ETF (IQSU).
"According to Refinitiv’s figures, assets under management in ESG funds leaped from $666.5 billion in 2004 to $3.47 trillion in 2020," a Mongabay article noted. "That’s a conservative figure when compared with the $30.7 trillion presented in the last report (from 2018) of the Global Sustainable Investment Alliance, formed by sustainable investment organizations around the world."
"According to Bloomberg, global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of all assets under management," the article added.
Per the fund description, IQSU seeks investment results that track (before fees and expenses) the price and yield performance of its underlying index, the IQ Candriam ESG US Equity Index.
The underlying index is designed to deliver exposure to equity securities of companies meeting ESG criteria developed by Candriam and weighted using a market capitalization weighting methodology. Overall, highlights of the fund include:
- A Passive Approach to ESG: Offers broad market exposure while leveraging the industry-leading ESG research data of CANDRIAM, an award-winning pioneer in sustainable investing.
- An Accessible ESG Solution: A differentiated ESG strategy within a cost-effective (9bps) and tax-sensitive ETF structure.
- A Core Equity Holding: Diversified equity exposure can help investors capture income and capital appreciation potential within different economic sectors.
The Big Tech Engine
Popping open the hood of IQSU, the top holdings primarily consist of big tech: Apple, Microsoft, and Google comprise about 18% of the fund.
Per the Mongabay article, the "perception is that tech giants tend to have a smaller carbon footprint than companies in other sectors — or, at least, it’s easier for them to reduce their emissions." As such, the lean toward big tech makes sense.
“If you are an oil company, for instance, to reduce your carbon footprint you have to change your product. If you are Google and your data center consumes a lot of energy, you can hire a solar energy system and that is it,” says Gustavo Pimentel from Sitawi, a Brazilian firm that works with investors and companies on sustainable financing.
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