In recent times, investors and asset managers alike have placed importance on investing in companies that align with environmental, social, and governance (ESG) principles. This trend has been gaining momentum as more investors believe that sustainable investments not only benefit the planet but also provide attractive long-term returns. However, even as this trend continues to evolve, some shareholders are pulling out of ESG-focused funds.
One example of this is the recent action taken by Rosenberg Matthew Hamilton which cut its holdings in iShares ESG Aware MSCI USA ETF by 35.7% during the first quarter of 2023. The move comes as a surprise to many who had pegged Rosenberg Matthew Hamilton as one of the firms committed to sustainable investing.
According to its most recent Form 13F filing with the Securities and Exchange Commission (SEC), Rosenberg Matthew Hamilton sold 14,420 shares of iShares ESG Aware MSCI USA ETF during Q1 2023, bringing its total holdings down to 25,987 shares. iShares ESG Aware MSCI USA ETF makes up just 0.8% of Rosenberg Matthew Hamilton’s portfolio, yet it remains one of their top twenty-two largest positions with a market value of $2.35 million.
The cut in holdings raises questions about why one would choose to reduce exposure to an ESG investment at a time when companies’ social responsibility ratings are at an all-time high and stakeholder capitalism is increasingly being adopted worldwide.
However, it’s important to note that while sustainable investing can deliver solid returns over time, there is no guarantee that it will always outperform or generate steady returns. At times, like any other investment strategy, there may be uncertainties and market conditions outside an investor’s control.
Moreover, there may be other considerations beyond ESG principles driving an investor’s decision-making process such as risk management or diversification goals across their portfolio.
Regardless of whether sustained selling follows from Rosenberg Matthew Hamilton or other investment firms, it may be too soon to declare it as a trend for all ESG-focused investments. Instead, it’s important to remember that the goal of ESG investing isn’t simply to gain returns, but also to foster a more sustainable and equitable future. Investors would do well to bear that in mind while evaluating their portfolio strategies going forward.
[bs_slider_forecast ticker=”ESGU”]
Institutional Investors Show Growing Interest in iShares ESG Aware MSCI USA ETF (ESGU)
Institutional investors have recently been shifting their attention to the iShares ESG Aware MSCI USA ETF (ESGU), with industry leaders buying and selling shares of the company. Personal Capital Advisors Corp, Sowell Financial Services LLC, RFG Advisory LLC, Financial Advocates Investment Management and Signature Securities Group Corporation have all boosted or grown their investments in ESGU during the fourth quarter.
Personal Capital Advisors Corp has now acquired 840,339 shares of the company’s stock worth $71,219,000 after purchasing an additional 39,108 shares during the period. Sowell Financial Services LLC also significantly increased its stake in ESGU by 122.5%, owning 82,233 shares of the company’s stock worth $6,969,000 after acquiring an additional 45,275 shares.
RFG Advisory LLC likewise has amplified its holdings with a boost in stakes by 1.4% at the end of Q4. This resulted in acquiring an additional 2,286 shares to reach a holding of 166,304 shares worth $15,230,000. Meanwhile, Financial Advocates Investment Management grew its holdings by a whopping 426.3%, adding an additional 39,449 shares to its portfolio and bringing it to a total of 48,703 shares valued at $4,128,000.
Finally on this list is Signature Securities Group Corporation which purchased new stakes in ESGU valued at approximately $87K last December in Q3.
ESGU opened on Monday at $95.22 on NASDAQ with a market cap of $14.16 billion and currently priced-to-earnings ratio standing at 18.83 and beta standing at 1.02 respectively.
Investors are eyeing ESGU as it tracks companies based on their positive environmental impact along with their focus on social responsibility while implementing good governance structures within organizations.
ESGU is managed by BlackRock and was officially launched on Dec 1, 2016, much to the enthusiasm of institutional investors who were already looking towards investing in businesses that prioritized ESG (environmental, social, and governance) considerations.