Many tech-heavy and growth-oriented ETFs took a dive Thursday when shares of Facebook plummeted 20 percent. But not all. Writing at ETF.com, Tom Lydon says NuShares ESG Large-Cap Growth ETF (NULG) avoided that fate as it holds no Facebook shares. “NULG follows the TIAA ESG USA Large-Cap Growth Index and allocates nearly 35 percent of its weight to technology sectors, making the absence of Facebook all the more interesting,” he says. Why is Facebook not in the portfolio? One of the environmental, social and governance factors the index screens for is a company’s data privacy policies, and on that basis, Facebook didn’t make the cut.
It’s a small example of how indexes based on ESG factors can hold an edge over the broader market, he says. “The ESG factors are an all inclusive categorization, so investors should not see this as something like an exclusionary-based investment approach. Furthermore, the responsible investment and ESG-related investment strategy is not intended to sacrifice performance or lower returns for the sake of achieving their goals—ESG investments have even shown to generate improved risk-adjusted returns over time,” he writes.