ESG has been surprisingly controversial, sparking widespread debate in the investment community. U.S. ESG flows skyrocketed in the past two years – only to plummet in 2022. Answering why this is, Geraci said, “I think the obvious answer is performance.” With many ESG ETFs growth-orientated and full of tech, they’ve been dragged down quite a bit this year.
While tech and growth have stumbled, energy has held up well. “Performance is king in the financial markets,” Geraci said, noting that ESG has also become more politicized. Advisors tend to want to be agnostic, making the politicization of ESG a bit of a headwind.
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