Communication Services UltraSector ProFd has a number of attributes that may meet the expectations of sustainability-focused investors, despite some issues worthy of attention.
Communication Services UltraSector ProFd's holdings are exposed to average levels of ESG risk relative to those of its peers in the Trading Tools category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. Unlike impact, which measures positive environmental and societal outcomes attributable to an investment, ESG risk reflects the degree to which investments could be affected by material ESG issues like climate change and inequalities.
One key area of strength for Communication Services UltraSector ProFd is its low Morningstar Portfolio Carbon Risk Score of 3.68 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy. Currently, the fund's involvement in fossil fuels is negligible, and compares favorably with 7.45% for its average peer.
One potential issue for a sustainability-focused investor is that Communication Services UltraSector ProFd doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes. The fund has extremely high exposure (42.25%) to companies with high or severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, controversies can damage the reputation of both companies themselves and their shareholders.