eToro, the social investing network, announced today the launch of ESG-Leaders, a portfolio offering retail investors long-term exposure to companies leading the way in environmental, social and governance (ESG) best practices.
“Our research shows that three in five (62%) retail investors sometimes or always consider ESG factors before investing. ESG insights can provide additional information about a company which is not usually accounted for in traditional financial analysis and growing evidence suggests that positive ESG performance can improve returns,” explained Dani Brinker, Head of Investment Portfolios at eToro.
The portfolio is built by identifying the four companies with some of the highest ESG score for their sector across 11 industry sectors, while also taking into consideration market capitalisation, liquidity, and sell side analyst ratings. The 11 industry sectors covered are: consumer discretionary, consumer staples, energy, financials, healthcare, industrials, information technology, materials, real estate, telecommunication services, and utilities. Names in the portfolio include Nivea’s parent company Beiersdorf, ABB, Nvidia and Telefonica. A full list can be viewed here.
“Based on the nature of their industry, companies are impacted by environmental, social and governance factors to different degrees. For example, an energy company will be more exposed to risks from environmental factors, while a financial services company is more likely to be exposed to governance risks. Constructing a portfolio of the top ESG leaders from 11 industry sectors offers a comprehensive, diversified portfolio that offers exposure to companies leaders in all three aspects of ESG.” added Dani Brinker.
The portfolio launch follows the introduction of ESG scores to the eToro platform for over 2,700 stocks. Powered by ESG Book, a global leader in ESG data and technology, the ESG scores combine the most up-to-date market news, NGO signals and company-reported information enabling users to consider environmental, social, and governance factors when building their portfolios.
eToro’s Smart Portfolios offer investors exposure to various market themes. Bundling together several assets under a defined methodology, and employing a passive investment approach, eToro’s Smart Portfolios are long-term investment solutions that offer diversified exposure with no management fees.
Initial investment starts from USD 500 and investors can access tools and charts to track the portfolio’s performance, while eToro’s social feed will keep them up-to-date on developments in the sector. For now, this portfolio is not available to US users.