As evidence grows to support the benefits of environmental, social and governance (ESG) investing, investors are seeking clarity as to how these considerations can be incorporated in investment portfolios. In our paper, we analyse the S&P/ASX 200 ESG Index, an ESG-enhanced strategy that applies exclusions and selects the strongest ESG companies while maintaining a broadly similar risk-return profile as the S&P/ASX 200 Index.
The Key Highlights are:
Six Park uses the SPDR® S&P®/ASX 200 ESG Fund (E200) in its sustainable investing portfolios, which were launched in December 2020.
When asked why Six Park selected E200, Pat Garrett, co-founder and co-CEO of the online investment management service, which works with financial advisers and professionals as well as consumers said sustainable investing was increasingly important to Six Park's partners and clients.
"At Six Park, we've seen accelerating demand from both consumers and financial advisers who serve them for an ESG offering that combines strong ESG characteristics without compromising a target risk/return profile.
"Our investment committee reviewed the marketplace of available ESG ETFs and we were pleased to select E200. SSGA's State Street Global Advisors’ and S&P's market track record and E200's transparency, alignment with Australia's leading share market index (ASX200) and low fees made this the optimal ETF for our ESG portfolios.
"We've been extremely pleased with the positive response from both consumers and our financial adviser partners with regard to E200 in meeting the demand for accessible, affordable and well diversified portfolios with an ESG tilt."
1 Pre-Inception Index Performance shown above is Back-Tested. The S&P/ASX 200 ESG Index was launched by S&P on 6 July 2020. All information for an index prior to its launch date is hypothetical back-tested data calculated by S&P based on the index methodology in effect on the Launch Date. Market indices are unmanaged and are not subject to fees and expenses which could lower returns. Index performance is not intended to represent the performance of any particular product managed by SSGA. Actual performance may differ substantially from the back-tested performance presented, as the performance was calculated with the benefit of hindsight, cannot account for all financial risk that may affect the actual performance, and is not a guarantee of future results. The Back-Tested Pre-Inception Index Performance data is reported on a gross of fees basis. You cannot invest directly in an index. The performance includes the reinvestment of dividends and other corporate earnings and is calculated in AUD.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
The views expressed in this material are the views of Pat Garrett at Six Park through the period ended 16 March 2021 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
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