State Street SPDR ETFs: Things to consider when returning to equities

State Street SPDR ETFs: Things to consider when returning to equities

Aandelen
Beursvloer (02)

Strength in markets throughout October saw investors increasingly nervous about being underweight in equities. Many investors have sold down equity holdings during the year to take on more defensive positioning. This has been right with the direction of inflation and rates as well as high volatility. The big questions are when and how to return to equities?

With the mid-term elections over, US large cap equities are now likely to be an asset class that investors want to return to. Chairman Powell’s comments after the latest Federal Reserve rate rise have pushed timing out, but State Street SPDR ETFs still believes a pivot in risk sentiment and investor behaviour is possible before the end of the year. One attractive way to be ready for better times in equity markets, especially given the immediacy of COP 27, is to incorporate ESG intentions, and consider funds which offer US exposure with best-in-class ESG strategy.

Rebecca Chesworth, Equity ETF Strategist at State Street SPDR ETFs: “When returning to equities after the significant market falls this year, many ETF investors have continued to choose an ESG fund for core US equity exposure. SPDR S&P 500 ESG Leaders UCITS ETF has a methodology that combines exclusions and ranking by ESG ratings, which maintains broad allocation and similar industry group weights to the S&P 500, the most popular investor benchmark. The best-in-class ESG scoring ranks all eligible securities in descending order of their S&P DJI ESG score. This is an aggregation of environmental, social and governance scores that measure ESG risk and performance factors with a focus on financial materiality. Stocks that are thereafter selected for index inclusion constitute the top 50% by float-adjusted market cap within each industry group, with any ranking lower also excluded.”