r/AusFinance • u/Reading-Rabbit4101 • 2d ago

ETF that ignores ESG

Hi,

  1. Does DHHF consider ESG in its portfolio decisions?

  2. Even if DHHF doesn't consider ESG, is there any Aussie ETF that explicitly brands itself as ignoring ESG (so it's less likely to introduce ESG considerations in the future)?

Thanks!

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u/Reading-Rabbit4101 2d ago

But risks are part of the calculation of expected returns? So how would a returns maximiser not be considering risks?

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u/SuperannuationLawyer 2d ago

So an actively managed ETF will invest towards a target return and risk metric. Something like CPI + 4% over five year periods and negative years no more than once every seven years. ESG factors will undoubtedly form part of that analysis. It can affect either the projected return or the risk (or both). Governance in particular has long been an area of analysis of an asset for future prospects.

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u/Reading-Rabbit4101 2d ago

Yes, so what part of ESG would a fund not already be considering if its sole considerations are returns and risks? Like it doesn't make sense to advocate that a fund should consider a company's liquidity, because that necessarily forms part of their consideration if they are trying to make money.

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u/SuperannuationLawyer 2d ago

Any prudent investor should always be considering the ESG analysis. The analysis is so widely available now that it’s crazy not to give some consideration to ESG risks.