When Returning to Equities Consider US Large Cap and ESG together
Strength in markets throughout October saw investors increasingly nervous about being underweight in equities. Many investors have sold down equity holdings during the year to take on more defensive positioning. This has been right with the direction of inflation and rates as well as high volatility. The big questions are when and how to return to equities?
With the mid-term elections over, US large cap equities are now likely to be an asset class that investors want to return to.
Chairman Powell’s comments after the latest Federal Reserve rate rise have pushed timing out, but we still believe a pivot in risk sentiment and investor behaviour is possible before the end of the year. One attractive way to be ready for better times in equity markets, especially given the immediacy of COP 27, is to incorporate ESG intentions, and consider funds which offer US exposure with best in class ESG strategy.
One of SPDR’s key and oldest ESG funds, SPDR S&P 500 ESG Leaders UCITS ETF, is benchmarked against the S&P 500 ESG Leaders index. The methodology of this index starts with exclusions on business activity, behaviour and low S&P Dow Jones ESG ratings, before all remaining eligible stocks are considered on the ESG ratings versus their industry peers. A recent Insights post from us considers some of the questions we receive from investors about these exclusions and the impact of them on the final selection.
In a new video, Rebecca Chesworth, SPDR ETFs, interviews Stephanie Rowton, S&P Dow Jones Indices, to hear more details on several of the interesting exclusion issues.
Another, very relevant option given the challenges in equities is SPDR S&P US Dividend Aristocrats ESG UCITS ETF. Hear from Ryan Reardon, SPDR ETFs, and Ari Rajendra, S&P Dow Jones Indices, on how the defensive, low-beta bias of Dividend Aristocrats can help investors in this environment.