MYTHEO’s ESG investment approach

Friday, 5 November 2021
Written by Royce Tan, Chief Market Insights Officer of GAX MD

MYTHEO’s entry into the environment, social and governance (ESG) space is rather timely as countries begin to rebuild their economies following the aftermath of Covid-19. 

The pandemic, which struck the world by a storm in 2020, brought to surface the many inherent problems that have snowballed in a capitalist world, from the widening wealth disparities between the rich and the poor, racial and gender inequality, and climate change, to name a few, not to mention the slew of corporate scandals in the past.

What the pandemic has done is that it has given a slight taste into the “profitability multiplier effect” for companies with strong ESG elements. In an analysis carried out by Refinitiv Lipper, it found that ESG-related funds registered an average higher overall outperformance of 3.78% in 2020 as compared to 2.15% for conventional funds. The resilience of the ESG element to market shocks was also reflected in the underperformance, which came in at -6.83% as compared to -7.25% for conventional funds.

The spotlight on ESG, which is slowly becoming the barometer to identify well managed and socially and environmentally responsible companies, is something we feel that is here to stay in its journey of redefining investments and this led to the rollout of our latest portfolio, the MYTHEO Global ESG.

There are currently 11 ESG ETFs in the investing universe of the portfolio, of which six have since been activated. They are:

1. iShares ESG Aware MSCI EAFE (ESGD)
Offered by BlackRock, this ETF obtains exposure to large- and mid-cap stocks in Europe, Australia, Asia and the Far East with favorable ESG practices. Among companies it tracks are Nestle S.A., Dutch chip making equipment manufacturer ASML Holding NV, LVMH Moet Hennessy Louis Vuitton and AstraZeneca plc.

2. iShares ESG Aware MSCI EM (ESGE)
Also offered by BlackRock, the ESGE obtains exposure to large- and mid-cap emerging market stocks. Companies tracked in this ETF include one of the world’s largest chip makers Taiwan Semiconductor Manufacturing Company (TSMC), internet companies Tencent Holdings and Alibaba Group and electronics manufacturer Samsung Electronics Ltd.

3. Nuveen ESG Large-Cap Value (NULV)
The NULV invests primarily in large-cap equity securities in the United States (US) that exhibit overall value style characteristics and that satisfy certain ESG criteria. Its positions include Procter & Gamble Co, Home Depot Inc, PepsiCo Inc, The Coca-Cola Co and Intel Corp.

4. iShares MSCI USA ESG Select (SUSA)
The SUSA, which is also offered by BlackRock, obtains exposure to a range of large- and mid-cap stocks in the US. Its holdings include tech giants such as Microsoft Corp, Apple Inc, Nvidia Corp, Texas Instruments Inc and Adobe Inc. Other holdings include Tesla Inc, BlackRock Inc and 3M.

5. Nuveen ESG Mid-Cap Growth (NUMG)
NUMG invests primarily in mid-cap equity securities in the US that exhibit overall growth style characteristics that satisfy certain ESG criteria. Companies in its portfolio includes Marvell Technology Inc, Cadence Design Systems Inc and Match Group Inc.

6. Nuveen ESG Large-Cap Growth (NULG)
NULG invests primarily in large-cap US equity securities that exhibit overall growth style characteristics and that satisfy certain ESG criteria. Its holdings comprise Microsoft Corp, Tesla Inc, Alphabet Inc, Nvidia Inc and Adobe Inc, among others.

MYTHEO Global ESG’s investment strategy

As you may have noticed by now, the MYTHEO Global ESG is a growth portfolio, similar to the strategy of the growth portfolio in our MYTHEO Omakase, but with ESG elements infused.

It uses the same proven algorithm and investment strategy of managing risks and returns, except that all the ETFs chosen are 100% ESG-compliant. We believe that investors should be empowered with the choice to align their investments with their values and the cause they believe in.

The six activated ETFs as explained above have a combined holdings or diversification into more than a thousand of different equities. This means that any investment you place with the MYTHEO Global ESG will automatically be diversified into more than 1,000 counters worldwide.

In terms of geographical regions, the ETFs currently activated have a total exposure of 47.08% in the United States, 7.96% in China, 5.67% in Japan, 4.25% in the United Kingdom and 4.03% in Taiwan. The remaining exposure lies in various other countries across the globe.

As for sector diversification, the breakdown of the three largest exposures currently is 21.48% in the consumer sector, 19.20% in financial services and 18.34% in information technology.

The MYTHEO Global ESG was back-tested all the way to July 2006, which yielded an annualised net return of 9.27% as compared to the MSCI ACWI Index, the global equity index, which generated 8.93%. It should be noted that the past performance is not an indication of future performance.

Start your ESG investment journey with MYTHEO today!

This material is subjected to MYTHEO's Notice and Disclaimer.

Back to Main Blog


and start your digital investment journey with MYTHEO!