The last couple of months have seen a heavy inflow of environmental and social governance (ESG) ETFs being issued. The ESG ETF providers track an index as usual but will eliminate any stocks which trade in weapons, tobacco, controversial products or violate the UN's principles.
To issue an ESG ETF, it requires a fair portion of analysing and monitoring to determine whether the stock can be included in the fund. Index provider MSCI is now eliminating the need to carry out this task by issuing a range of ESG indexes.
Serving as the basis of investment products, including ETFs, the range containing six ESG indexes hopes to satisfy the growing demand for the latest trend.
The six indexes include:
MSCI EMU ESG Screened Index
MSCI USA ESG Screened Index
MSCI Europe ESG Screened Index
MSCI World ESG Screened Index
MSCI Japan ESG Screened Index
MSCI Emerging Markets IMI ESG Screened Index
Deborah Yang, Global Head of ESG Indexes, said in the announcement: "Making exclusions with a market capitalization approach has been possible for many years and MSCI has done so for over two decades. We have observed a growing interest amongst institutional and wealth investors for market capitalization indexes with ESG exclusions as an off-the-shelf solution, ones that are easy to use and implement."
Index performances - Net returns:
MSCI EMU ESG Screened Index:
1 month1 year5 yearMSCI EMU ESG Screened Index-0.46%-1.45%7.57%MSCI EMU Index-0.28%-0.53%7.69%
MSCI USA ESG Screened Index:
1 month1 year5 yearMSCI USA ESG Screened Index0.23%17.81%13.51%MSCI USA Index0.42%17.22%13.09%
MSCI Europe ESG Screened Index:
1 month1 year5 yearMSCI Europe ESG Screened Index0.24%0.39%6.75%MSCI Europe Index0.53%1.47%6.92%
MSCI World ESG Screened Index:
1 month1 year5 yearMSCI World ESG Screened Index0.37%11.46%9.55%MSCI World Index0.56%11.24%9.28%
MSCI Japan ESG Screened Index:
1 month1 year5 yearMSCI Japan ESG Screened Index2.95%10.25%7.02%MSCI Japan Index3.04%10.20%6.76%
MSCI Emerging Markets IMI ESG Screened Index:
1 month1 year5 yearMSCI EM IMI ESG Screened Index-1.03%-1.52%3.65%MSCI EM IMI Index-0.85%-1.18%3.51%