Exchange-Traded Funds Are Making It Easy To Be A Socially Responsible Investor
Friday, November 4, 2016
Socially responsible investing used to be very low on the priority list for most fund providers. Some may even relegate it to a niche trend with small market potential when compared to the overwhelming demand for income or smart-beta indexes. However, the rise of gender equality, environmental impact, and other social issues has created a booming new category within the ETF universe.
This year alone, there have been 12 new ETFs released that focus on “Environmental, Social, or Governmental” issues, otherwise known as ESG. These new funds are aimed at greater control over company, sector, geographical, and factor exposure in a low-cost and diversified investment vehicle.
Investors want the ability to put their money towards corporations that share their values. Or, at the very least, avoid some industries with questionable track records of corporate governance or that rely heavily on harvesting natural resources. ETFs make for a very easy way to access this movement and are continuing to refine their methods to create even greater control for their shareholders.
The iShares MSCI USA ESG Select ETF (KLD) is part of the first generation of ESG investing and has been in existence since 2005.