Maybe you missed this Wall Street Journal headline in early June...Frankly, this kind of thing is common in the grand scheme of finance. But the reason behind this particular resignation doesn't happen every day...
Stealth 'ESG' Scams Can Kill Your Returns
By Karina Kovalcik, senior quantitative analyst, Chaikin Analytics
Maybe you missed this Wall Street Journal headline in early June...
Frankly, this kind of thing is common in the grand scheme of finance. But the reason behind this particular resignation doesn't happen every day...
You see, Asoka Woehrmann was the chief executive of Deutsche Bank's funds arm, DWS, until last Thursday. That's when he resigned because of "greenwashing." No kidding...
German authorities accused Woehrmann of misrepresenting his team's "ESG" funds.
In case you're not aware, ESG stands for "environmental, social, and governance." It's essentially Wall Street's way of describing "investing for a cause" or "do-gooder investing."
In September 2018, DWS wrote a report about investing responsibly under this basic ESG framework. The company claimed to be a responsible investor for the previous 20 years.
Apparently, the German authorities disagree.
Now, it might seem like this battle doesn't involve you. But don't let the problems in the ivory tower fool you... Individual investors face this problem every day.
Unfortunately, it's not just about DWS. Many funds aren't quite what they claim to be. And in the end, these misrepresented ESG funds can chew up investors' gains for no reason.
So today, let's take a closer look at how stealth ESG scams can kill your returns...
The man who called the 2008 and 2020 crashes predicts a massive financial "heist" could sweep the U.S. He has already warned the U.S. Pentagon and the FBI. But few people are willing to admit this could actually happen on U.S. soil. Or how one move right now could make you massive profits as it unfolds. Click here to learn more.
One of the biggest and most important stores in America just sent out a terrifying signal for you and your money. The big-box retailer is preparing for a shocking economic reality – canceling product orders and slashing prices to sell off what it's got. It's a major warning signal for most investments. Even worse – your cash savings could be at risk. Click here for the full story.
ESG investing is a fad in the investing world.
The idea is that investors can choose to only invest in ethical companies. And as I noted earlier, this approach spans three different categories – environmental, social, and governance.
ESG investors intend to invest in socially "responsible" companies. And they want to avoid the "irresponsible" ones.
In principle, it seems like ESG investing is about putting your money where your mouth is. But unfortunately for investors, that's not often what actually happens...
One survey of ESG funds years ago found that 95% committed at least one of the "seven sins of greenwashing." These seven sins include things like outright lying and tricking users into making hidden trade-offs.
That's how German authorities set their target on DWS. Prosecutors found evidence that the company wasn't using its claimed investing criteria.
That presents a major problem for individual investors...
You see, ESG-oriented funds held around $350 billion as of the end of 2021. But that doesn't mean investors are getting the "feel good" results they want from these investments...
Just look at the Vanguard ESG U.S. Stock Fund (ESGV) as an example. Its top 10 holdings might surprise you..
ESGV is one of the world's largest ESG-focused funds. And yet, as you can see, it looks and performs a heck of a lot like an S&P 500 index fund.
However, there's one critical difference for individual investors like us...
The ESG version has a significantly higher fee. ESGV's net expense ratio is 0.09% today, while the Vanguard 500 Index Fund's (VOO) net expense ratio is only 0.03%.
Even "low fee" Vanguard charges three times as much for its ESG fund as it does its broad market fund.
So the recent case with DWS in Germany is likely just the start. If the Vanguard example is any indication, we can expect to hear more accusations of greenwashing in the near future.
The bottom line is...
If you care about ESG, be wary of these types of "one click" investments. Your best bet is to do the research yourself.
Draw your own conclusions. And then, invest in ESG accordingly – or not at all.
Good investing,
Karina Kovalcik
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-2.78%
2
24
4
S&P 500
-3.82%
24
357
115
Nasdaq
-4.65%
0
70
28
Small Caps
-4.73%
171
1180
535
Bonds
-3.14%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have become Bearish. Major indexes are mixed.
* * * *
Top Movers
Gainers
CME
+1.55%
TFC
+1.50%
DRE
+0.98%
MCD
+0.46%
DPZ
+0.03%
Losers
SBNY
-13.67%
CZR
-12.88%
NCLH
-12.23%
PENN
-11.44%
CCL
-10.32%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
LPLA
No earnings reporting today.
Earnings Surprises
ORCL Oracle Corporation
Q4
$1.13
Missed by $-0.05
* * * *
Sector Tracker
Sector movement over the last 5 days
Staples
-4.71%
Energy
-5.94%
Health Care
-6.28%
Industrials
-8.17%
Utilities
-8.86%
Financial
-9.75%
Communication
-9.83%
Materials
-10.30%
Real Estate
-10.34%
Information Technology
-10.51%
Discretionary
-10.79%
* * * *
Industry Focus
Transportation Services
0
35
14
Over the past 6 months, the Transportation subsector (XTN) has underperformed the S&P 500 by -5.20%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 11 slots over the past week.
Indicative Stocks
HA
Hawaiian Holdings, I
SAVE
Spirit Airlines, Inc
ALGT
Allegiant Travel Com
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at diansastroxz.forex@blogger.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Post a Comment
Post a Comment