Eyeing ESG Investments? Here Are 2 ETFs To Buy In 2021

Summary

  • Canada aims for net zero emissions by 2050 and this might increase focus on environmental, social and governance (ESG) initiatives.
  • In the fourth quarter of 2020, there were ESG ETFs worth C$ 5.3 billion, according to TD Securities.
  • In this article, we look at two ESG ETFs you might consider exploring this year:

Climate change has been a raging topic over the past few years and Canada is taking steps to combat it. In this year's federal budget, the Justin Trudeau government announced plans to create a sustainable and green economy.

The country aims to achieve net zero emissions by 2050 and this might result in an increased focus on environmental, social and governance (ESG) and green energy initiatives.

Over the last decade, ETFs or exchange traded funds have become popular in Canada as they can offer some major benefits. There are varieties of Canadian ETFs available in the market, including ESG ETFs.

In the fourth quarter of 2020, there were ESG ETFs worth C$ 5.3 billion in Canadian markets, according to TD Securities. As Canada aims for green transformation, the worth of these ETFs might rise in near future.

In this article, we will explore two ESG ETFs you might consider buying this year:

iShares ESG Advanced MSCI Canada Index ETF (TSX:XCSR)


The iShares ESG Advanced MSCI Canada Index ETF (TSX:XCSR) is apt for sustainable investing. It prioritizes companies with higher ESG rating and excludes companies that may pose a higher ESG risk.

One-year chart of stock performance of iShares ESG (Source: Refinitiv/Thomson Reuters)

At market close on May 5, 2021, XCSR ETF was priced at C$ 59.49, up 39 per cent in comparison to the same day last year. It holds a dividend yield of 1.101 per cent and distributes quarterly dividend of C$ 0.213.

As per TMX, this ETF offers a 12.3 per cent return on equity (ROE) and holds a price-to-earnings (P/E) ratio of 18.3.

It has delivered about 10 per cent year-to-date (YTD) returns and 2.5 per cent quarter-to-date (QTD) returns.

 

Invesco S&P 500 ESG Index ETF (TSX:ESG)


This ETF provides its investors an entry point to large-cap companies in the US while keeping the ESG considerations intact. Invesco claims that S&P 500 ESG is designed to provide a risk and return profile and makes it a core portfolio holding.

One-year chart of stock performance of Invesco (Source: Refinitiv/Thomson Reuters)

It distributes quarterly dividend of C$ 0.081 and registers a current dividend yield of 1.2 per cent. The ETF also offers 29.5 per cent ROE and 9.6 per cent return on assets (ROA).

On the returns front, the ETF's YTD returns sits at about eight per cent and its QTD return is 2.6 per cent. 

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.


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