Best International Share ESG Funds
If you are concerned about the environment, you can leave it to the experts to choose the investments that will benefit the planet
The popularity of exchange traded funds is surging and sustainable ETFs are gaining a reputation as the best-in-breed across the managed funds landscape. No longer are sustainable investments regarded as an exotic asset class.
Where do those funds invest? Overwhelmingly in Europe.
According to Morningstar’s 2020 Global Landscape of passive sustainable funds, a record $188.8 billion was invested in Europe at the end of June, accounting for 9.2% of the continent’s passive funds and 75% of global passive assets. The US accounts for about 20%.
Riding this wave is this year’s category winner, the BetaShares Global Sustainability Leaders ETF.
“This increased interest in socially responsible investing, both in Australia and globally, coincides with widespread and growing concern around the environment and global warming,” says BetaShares chief executive Alex Vynokur.
“The devastation of the Australian bushfires brought the very real effects of climate change to the forefront of investors’ minds. Now, more than ever, many investors are looking to put their dollars to work towards a sustainable future.”
BetaShares takes its ESG mandate seriously. In addition to its regular screening process, the responsible investment committee can exclude a company that it believes is exposed to significant ESG-related reputational risk or controversy.
“[Our] methodology gives ethical investors confidence that the fund is true to label, and will deliver on the promise of offering an ethically screened portfolio that aligns with their values,” the fund manager says.
The BetaShares fund reported more than $60 million of inflows during September 2020.
If you’d prefer to gain international exposure through an actively managed fund, the Pengana International Fund – Ethical Opportunity is a good way to go.
It invests in 30 to 50 companies that demonstrate large and growing free cash flow, which are screened using filters that weed out industries such as mining and gambling.
The third placegetter, the Nanuk New World Fund, goes a step further by investing only in companies involved in clean energy, energy efficiency, industrial efficiency, waste management, pollution control, food and agriculture, advanced and sustainable materials, water and healthcare technology.