ESG ETFs have lost their luster in recent years -- just don’t tell the Calvert U.S. Large-Cap Core Responsible Index ETF (CVLC). The fund has performed well over the last one-year period despite so much uncertainty around ESG investing. Amid challenges both fiduciary and political, ESG investing has struggled somewhat, it’s true. Yet with many investors still looking for ESG options as the style enters a new era, CVLC may be bucking the trend.
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The ESG ETF has returned 26.3% over the last one-year period, according to data from Calvert. That outperforms some notable rivals like the iShares Global Clean Energy ETF (ICLN). The fund has returned -28.3% over one year, greater than 50% less than CVLC. So, not only has CVLC bucked a broader downward trend in ESG, it has also eclisesd ESG rivals.
How has the ESG ETF pulled off that performance? CVLC tracks a market-cap-weighted, ESG-screened index of U.S. large-cap stocks. Its index takes the 1,000 largest U.S. firms by market cap and applies the Calvert Principles to hone the list. That proprietary research assesses each firm’s business based on factors like respect for human rights, environmental sustainability, resource efficiency, and transparency.
That home-brewed approach leans on Calvert’s long-term experience in the ESG space. It charges just 15 basis points (bps). That stands out relative to ICLN, which charges 41 bps.
So, why look to an ESG ETF right now amid that broader ESG downtrend? ESG still appeals to major investing constituencies like millennials and Gen Z investors. Many firms, endowments, and other larger organizations also have to consider ESG factors. For advisors with clients that fit into those categories, or simply want to take a more thoughtful approach to investing externalities, CVLC may appeal.
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