Rating Dominate

The top holdings of many ESG funds may be surprisingly familiar, that is Megacap tech stocks dominate ESG funds.

While ESG funds strategies consider a company’s environmental, social and governance factors, these funds still aim to invest in top performers across industry groups.

They think the idea isn’t to be super concentrated and only select a handful of stocks that do the best from an ESG or from a climate principle, but to still have a portfolio that largely resembles the economic makeup of the US economy.

For example, USCA, which manages the Xtrackers MSCI USA Climate Action Equity ETF, its top holdings include Nvidia, Amazon, Microsoft, Apple, Meta Platforms and Google’s parent company Alphabet— six of the “Magnificent Seven” mega-cap tech stocks that also lead ETFs that track the S&P 500.