Liquid Alternatives: How the Pandemic Could Affect ESG Investing (and ETFs)

The coronavirus pandemic throws up ESG in a new light.

Far from spelling doom for ESG investing, the pandemic may have given it fresh, positive potential. An article by Marlene Satter in benefitsPRO outlines nine ways the pandemic could affect ESG, yet launch it as the new normal in investing. And ESG ETFs could benefit from a fresh tailwind.

ESG investing may have changed forever, post-pandemic

According to Satter, the lockdowns have shown how curtailment of human activity affects the environment positively with pollution levels dramatically down in many parts of the world. Further, companies that stood by their employees during the crisis will gain respect and be rewarded. Satter also points out that new methods of working emerged such as online communication and remote working. On the other hand, the pandemic punished carbon-intensive industries such as airlines and other transports.

Satter makes a significant point that ESG ETFs have seen better fund flows during the last few weeks’ volatility—and much lower outflows, with just 8 percent of such flows compared with 25 percent of all others.

ESG ETFs held up better in the crisis

During the first quarter of 2020, 59% of U.S. ESG ETFs beat the S&P 500 Index, while 60% of European ESG ETFs outperformed the MSCI Europe Index, according to Zacks.

Surveys point out that over the next five years nearly a third of investors will allocate 11%-20% of their portfolio to ESG-focused ETFs. Further, it has been observed that approximately 95% of millennials tend to be socially responsible in their investing.

Here’s a look at some ESG focused ETFs that have outperformed the S&P500 during the first quarter:


ETF Ticker Tracking index Expense Ratio YTD Return
Global X Conscious Companies ETF NASDAQ: KRMA Concinnity Conscious Companies Index 0.43% -25.2%
iShares ESG MSCI USA Leaders ETF NASDAQ: SUSL MSCI USA Extended ESG Leaders Index 0.10% -21.3%
Nuveen ESG Mid-Cap Growth ETF BATS: NUMG TIAA ESG USA Mid-Cap Growth Index 0.40% -19.90%
SP Funds S&P 500 Sharia Industry Exclusions ETF NYSEARCA: SPUS S&P 500 Shariah Industry Exclusions Index 0.49% -18.1%


Related Story:        Liquid Alternatives: Lyxor’s New Suite of Climate Change ETFs                                           

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