May 09, 2022
During a panel discussion on the continuum of indexing to active investing, Vanguard’s Jim Rowley Jr., CFA, head of investor research, explains why direct indexing is not indexing, but rather a portfolio management solution.
Jim is joined by Ben Johnson, CFA, Director of Global ETF and Passive Strategies Research at Morningstar in this segment.
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
ESG portfolios are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the data provider for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other portfolios screened for ESG criteria. The data provider’s assessment of a company, based on the company’s level of involvement in a particular industry or the data provider’s own ESG criteria, may differ from that of other portfolios or of the advisor’s or an investor’s assessment of such company. As a result, the companies deemed eligible by the data provider may not reflect the beliefs and values of any particular investor and certain screens may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the customized investment strategy will depend on the data provider’s proper identification and analysis of ESG data.