Sustainable ETFs often perform poorly – what investors need to know now.

Sustainable ETFs often perform poorly – what investors need to know now.

Economists are concerned about the poor performance of sustainable ETFs. According to a report from amp2.wiwo.de, special theme ETFs on sustainability often struggle to achieve good returns. The definition of climate protection and sustainability is very broad, making it difficult for investors to identify good products. This means that the relevant industry does not gain momentum on the stock market, despite economic support programs. An example of this is the iShares Clean Energy ETF, which has lost more than 50 percent of its value since the beginning of 2021. Another challenge is the vague definition of climate protection and sustainability, which is visible in various indices on the topic and also affects the performance of ETFs.

The replacement of traditional indices with ESG variants is also an issue that should be viewed critically, as it can significantly change ETF portfolios. An example of this is the investment giant BlackRock, which recently swapped the MSCI World High Dividend Yield index for an ESG-compliant version. This led to better performance of the ETF in the short term, but long-term effects are not yet foreseeable. Economic experts therefore recommend that you, as a responsible citizen, deal with ESG and CO2 issues yourself before investing in corresponding ETFs.

It is important that investors carefully consider the risks and rewards of sustainable ETFs and keep potential long-term impacts in mind. The development of the ETF industry in the areas of sustainability and climate protection is eagerly awaited in the coming years as markets and investors become increasingly aware of these issues.