ESG Risks: What Today’s Advisor Needs to Know
AAs a financial advisor, what is your position in terms of ESG allocation for your clients? Today’s fundraising is not just about appealing to your conscience; the data clearly shows that there are concrete ESG-related risks that can harm some companies while benefiting others. With so many clients asking for ESG strategies, advisors sometimes overlook these opportunities.
In the next webcast, ESG Risks: What Today’s Advisor Needs to Know, Joe Reiland of American Century Investments, Vice President, Senior Portfolio Manager; and Rene Casis, VP, ETF Portfolio Manager, will provide an in-depth discussion of ESG factors that could impact your clients’ portfolios.
For example, the American Century Sustainable Growth ETF (ESGY) is an answer investors can turn to. Simply put, companies residing at ESGY have clear sustainability goals and strive to improve or exceed social and governance goals. How the list of actively managed funds is constructed is relevant to investors at a time when ESG ratings and ratings are under the microscope.
ESGY combines quantitative and fundamental research from multiple sources to ensure exposure to companies with more attractive ESG characteristics. The strategy employs a dynamic risk management process focused on understanding and quantifying all portfolio risks. Overall, ESGY is a solid idea for advisors and investors looking to demystify ESG principles while taking a growth-focused approach to sustainability. These features could prove attractive in the long run.
Moreover, the American Century Sustainable Equity ETF (ESGA) could eventually become an investor favorite in the ESG ETF space due to its actively managed nature. This style of management could be an advantage for investors, as issues such as greenwashing and ESG rating remain prominent in this part of the fund landscape. As an active fund, ESGA can focus on legitimate ESG opportunities while avoiding companies with weak ESG credentials.
ACI’s proprietary model assigns each stock a score for financial metrics and a separate score for ESG metrics, then combines them to arrive at an overall score. Top-rated stocks are selected from each sector, creating a portfolio with strong performance and higher ESG ratings than stocks in the S&P 500 Index.
Financial advisors interested in learning more about ESG investing can register for the Tuesday, March 8 webcast here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.