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ETF Specialist

Revisiting ESG Integration and Market Representation

The role of the parent index in ESG strategies.

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Shopping for environmental, social, and governance funds might feel a bit like walking down the supplements aisle at the grocery store. There is a vast array of products from multiple brands, each with a different tagline. It’s often difficult to gauge which is right for you, especially when the language around these products doesn’t lend itself to easy comparisons.

In an effort to sort out what’s what, we previously shared a simple framework to help investors sort ESG strategies. More recently, I animated this framework with a case study that focused on three ESG-intentional indexes from MSCI that underpin five different Morningstar Medalist funds. In this article, I will further animate the key factors that investors should consider when they peel back the label on ESG-intentional index funds, diving into another trio of ESG-intentional indexes: the FTSE USA All Cap Choice Index and its international counterpart, the FTSE Global All Cap ex USA Choice Index, as well as the FTSE4Good U.S. Select index. Each of these indexes underpins a medalist fund.

Lan Anh Tran does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.