ESG isn’t going away. Yes, it’s taken hits over the last few years, losing its status among the biggest investing themes. That said, for many investors big and small, individual and institutional, it remains an important part of portfolios.
For those with clients asking about ESG, however -- particularly clients nearing retirement -- balancing sustainability with returns poses a challenge. That’s where one particular ESG ETF duo can play a role.
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Some 80% of global investors have sustainable investment policies in place, according to a survey from Tufts and Deloitte. Research from Morgan Stanley, meanwhile, showed that at the start of the year more than half of individual investors planned to increase their allocations to sustainable investments.
Of course, for many advisors, finding the right strategy poses a challenge. The “right” ESG ETF would likely be one that combines performance with sufficient ESG screening. While many such strategies may miss out on returns because of poorly designed screens, the duo of CVLC and CVIE could appeal.
The Calvert International Responsible Index ETF (CVIE), charges an 18 basis point (bps) fee for its services. Tracking its market-cap-weighted, ESG-screened index of large-cap stocks, it applies the shop’s Calvert Principles to its approach. That proprietary research evaluates firms based on factors like human rights, environmental sustainability, and transparency. Its deep research focus can help quite a bit given how other ESG indexes may lack information on foreign firms.
At the same time, it may pair well with the Calvert U.S. Large-Cap Core Responsible Index ETF (CVLC). CVLC charges 15 bps for its services. It tracks a market-cap-weighted index of U.S. large-cap stocks, applying the same Calvert Principles. CVLC has returned 23.8% since inception, while CVIE has returned 12.9% since its launch.
Together, they provide diversified, deeply researched options in the ESG space that can compete on performance with other U.S. and international equities strategies. For investors still looking for a dash of ESG in their portfolios, keep an eye on this ESG ETF duo.
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