The Fastest Growing ESG ETFs in the World
Younger investors think Exchange Traded Funds have always been here. However, we know that’s not the case. In fact, the first American ETF was born in 1993 and it’s one of the most traded equity instruments today; namely SPY (the S&P 500 ETF). The first European ETFs were iShares Stoxx Europe 50 Ucits ETF and the iShares Euro Stoxx 50 Ucits ETF in 2000. However, if you look at the popularity of ETFs, they really accelerated in 2008 when cynicism was high for active investing and appetite was low for paying high fees. Just last week, a big milestone in the ETF story was reached. (If you listen to this clip at 2 minutes in, you will get more detail on that from BNY Mellon’s Head of ETFs) For the first time, a mutual fund has been converted to an ETF and it’s not going to be last. For years, we’ve read of mutual funds’ outflows and ETFs’ inflows, but we’ve seen how those two actions can happen simultaneously for the first time.
As we look at the trends over the years of ETFs, it’s difficult to pick out a time when Europe led the way or even was ahead of the US. Until now. Europe is leading the way to ESG ETF investing and that trends continue and intensify today. According to Track Insight, “Europe represents 63% of the ESG market in terms of assets and attracted 68% of the global ESG flows over the first quarter of 2021.”
Therefore, when it came to planning for the latest episode of the ESG & Tech Show, I proposed that we discuss “Fastest Growing ETFs in ESG”.
If the brief was to simply find the Fastest Growing ETFs, we could have achieved that in two seconds flat! All that would involve is:
- Open the program
- Click on the “Viewers” tab
- Select “ETF Viewer” on the right
- Rank the list by RT (Relative Timing)
Remember that RT is “computed from an analysis of the direction, magnitude, and dynamics of a stock’s price movements day-over-day, week-over-week, quarter-over-quarter, and year-over-year. If a trend dissipates, RT will gravitate toward 1.00.”
Therefore, it’s simple to find the fastest moving ETFs in double-quick time.
However, when we consider what the fastest-growing ESG ETFs might refer to, we might not always agree. I asked the audience what they felt “fastest-growing” could be defined by, they interacted with a range of answers:
There were some extra that I added into the mix too:
- A leading indicator is the type of indexes being published.
- Assets under management
And… the one that nobody brought up….
- The most ESG of ESG ETFs – in other words, the ETFs were climbing the ranks of ESG metrics.
During the episode, we discussed a range of ways to seek these out. iShares is the largest ETF provider in the world and you can rank their ETFs in terms of returns, cost (called Expense Ratio), and various forms of ESG ratings. The latest news will give you insights regarding new indices. For example, I mentioned how the bigger players (i.e. Standard & Poor) are developing ESG indices now in medium and smaller cap stocks. Since the large-cap space is getting pretty crowded and the demand continues to grow, the industry needs to evolve.
However, when it comes down to gathering your research like this, it’s always a good idea to place everything in a VectorVest Watchlist so that you can keep an eye on the direction of those ETFs of interest to you and examine their aforementioned RT as well as their dividend yield, their Comfort Index or their Volume. Further, you can compare each of your individual ETFs with the average of your watchlist too.
Here is what you need to do:
- Click on Viewer
- Select “Watchlist Viewer”
- Choose the “New” icon, give it a name and pick the folder that you want to put a watchlist into – I always pick “My Watchlists” as the name suggests!
- In the “Add Symbols” at the top of the screen
For example, during the episode, we discussed “DSI”, “ESG”, “SDG”, “ESGD” in the US. In Europe, we might choose ESGE.DE or XZEU.DE.
Of course, the next thing you need to do is subscribe to the VectorVest Live YouTube channel so that you get an alert for the next episode of the ESG & Tech Show!