Now that you have some insights into ESG related fixed-income assets, we'll now introduce you to ESG themed exchange-traded funds, another asset class in the sustainability-related space. If you're not already familiar with ETFs, IB care offers several courses on the subject through its Traders Academy education platform, including an introduction to exchange-traded funds. In short, an ETF can be likened to a mutual fund. But among other differences, shares of ETFs trade on an exchange and on an intraday basis, similar to a stock. Also, while the majority of ETFs are designed to replicate and track an index, others are not index trackers, are actively managed. In the video that follows Ron Delegge, founder of ETF guide and host of the series ETF battles, is joined by two analysts who compare and contrast three index-based ESG focused ETFs from iShares and Vanguard. With their evaluations formed on the basis of cost, exposure strategy, performance, and more. But before we delve into that ETF battle, Delegge provides us with a broad overview of ESG themed ETFs, including how standards vary across these products, as well as presents four of the top US-listed ETFs by assets, which may be used to begin your research. Stay with us for ETF strategies for the mindful investor, coming up next. You want to invest, but you want to do it in a way that's responsible, that doesn't damage the environment or hurt people? Now if that describes you, then ESG investing is probably right up your alley. In the ETF market, sustainable investing is interchangeable with ESG, which screens publicly traded stocks by their adherence to certain standards dealing with the environment, with social matters, as well as governance factors. Now it's all about holding publicly traded companies accountable and really making sure that they're exercising corporate responsibility. Broadly speaking, ESG is really a three-pronged approach to sustainable investing. Let's talk about the E, the S, and then we'll talk about the G. Beginning with the E, which stands for environmental issues, or having a positive impact on the environment. Next up is the S, which represents social issues, or having positive relations with employees, with customers, and which stakeholders. Last up is the G, which stands for governance issues, and that really deals with having better leadership practices, a reasonable executive compensation, and also shareholder rights. It's important to understand that ESG standards are not the same across the board for all ETFs. For instance, while one ETF may exclude companies involved in tobacco or controversial weapons or companies that score poorly in customer relations or another ESG factor, other ETFs may include exposure to some of these same companies. Also, the ESG standards used by ETF firms may not necessarily align perfectly with your own personal ESG standards. In other words, there can be a disconnect. Here's the point, ESG ETFs may give you most of what you want, but not necessarily everything. While the assets and ETFs using ESG strategies have increased substantially over the past few years, the US ETF market is still largely concentrated in funds run by industry heavyweights like iShares and Vanguard, or using their scale to push down cost. What are the top ESG related ETFs by total assets? As of right now, there's four US-listed ETFs that dominate this space, and I'm going to give you the ticker symbols. We begin with SUSL. There's also DSI. Those two ETFs are from iShares, and then you've got ticker USSG from Xtrackers, and then finally another iShares ETF, ticker symbol, SUSA. If you're looking for ETFs that screen stocks based upon environmental, social, and governance factors, all of these funds are an excellent place to begin your research. Begin, right? Because there's still more that you need to do beyond that. But these four funds, each hold between about 1-2 billion in assets, which is pretty big for these types of ETFs. What if you still can't find ESG funds that perfectly aligned with your own personal views or ESG standards, then what? One possible solution that I'm going to give you is to focus on which particular aspect of ESG investing is most important to you. For example, if it's the environment, if that's the crucial factor that really drives your decisions, well then look at owning shares in companies that produce renewable energy. Some examples of renewable energy resources include sunlight, wind, rain, tides, geothermal heat, and funds that invest in these types of environmentally friendly companies are sometimes referred to as clean energy ETFs. Again, this is just the E part of ESG investing. It doesn't really deal with the S or the G part. It's not a perfect ESG solution per se, but rather a partial solution. Check out the iShares global clean energy ETF, ticker symbol, ICLN, along with the iShares Low Carbon Target ETF, ticker symbol, CRBN. Both of these ETFs would fit the bill as environmentally friendly investment options. That concludes our discussion of ESG investments and ETFs. I'm Ron Delegge with ETF guide. Thanks for watching.
