The ESG story is getting very political, and very weird. Florida and Texas are taking aim against ESG. BlackRock, the world's biggest ETF issuer, found itself on a list promulgated by Texas, which listed 10 firms it says are boycotting energy companies. BlackRock was the only U.S. company on the list and now may be subject to disinvestment from the state of Texas. Blackrock says it is not boycotting oil. And Florida this month banned its $186 billion pension fund from investing according to ESG factors.
Join me on ETF Edge next Wednesday to discuss where ESG is and where it is going, with Arne Noack, Head of Systemic Investment Solutions for the Americas for DWS (a major provider of ESG ETFs), and Todd Rosenbluth, head of research at VettaFi. ETFEdge.cnbc.com. Other guests may join!
Even before all this, the shine was off ESG. Katherine Greifeld at Bloomberg notes that "After two years in which more than $32 billion flowed into US exchange-traded funds with an ESG focus, investors have put only about $4.5 billion into such ETFs in 2022. Seven have closed, and US and European regulators are starting to crack down on claims made by fund creators ...This year has delivered a double blow to performance. Technology shares, which are heavily represented in ESG portfolios, have suffered from soaring inflation and higher interest rates, while the war in Ukraine has made a winner out of energy shares, which many ESG funds exclude."
Cathie Wood's ARKK sees biggest monthly outflow in nearly a year. That was the headline, and it's true, but a little context is needed. The fund had 206 million shares at the start of August, it closed with 190 million, a fairly sizeable drop, but those 206 million were the highest of the fund's entire eight-year existence.
Single stock ETFs keep expanding. Direxion is planning bull and bear ETFs on four energy names: Chevron, ConocoPhillips, ExxonMobil and EOG Resources.
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