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How is ESG passive investment?
by CameronNemo 3y ago
How is ESG passive investment?
- legitster 3y agoIn most cases the are not! If you buy an S&P 500 Index you are not buying an ESG fund at all. For a fund to be passive, all you are saying is that you are following pre-set rules for that fund. And there are any number of investment products these companies make and offer that use any sort of pre-set criteria. You can take a look at one of Vanguards (few) ESG index funds and their criteria are very clearly presented at the bottom of the page: https://investor.vanguard.com/investment-products/mutual-funds/profile/vftax https://investor.vanguard.com/investment-products/mutual-fun...
- deleted 3y ago[deleted]
- ke88y 3y agoThe two are totally orthogonal. Passive refers to fund management style, and passive management can certainly be based on inputs that require human judgement or decision making. Eg, the components of the S&P 500 are selected by committee, but obviously SPY is passively managed. You can have a passively managed fund that is designed to to track an index of companies with a certain ESG score, or to track an index as well as possible while excluding non-ESG components, for example.