FYI: A problem with legacy environmental, social and governance products is they can be highly exclusionary, and that means there is an automatic bias that can impair performance against standard benchmarks such as the S&P 500 or Russell 1000 indexes. These are indexes against which many managers are measured and could be the reason why ESG asset flows across advisor channels have been weaker than the tidal wave of funds flowing from institutional investors. So states a paper from FlexShares, “The Integrated Core Approach to ESG: The Case for the Next Generation of ESG Investing.”
Instead, today’s ESG funds should focus on the “holistic” approach of building a portfolio that “has a securities selection methodology that adheres to a total return and risk-adjusted return idea,” Abdur Nimeri, senior investment strategist for FlexShares ETFs, told ThinkAdvisor.
Regards,
Ted
https://www.thinkadvisor.com/2019/01/03/will-advisors-actually-use-these-esg-funds/
