Scientific Beta

VettaFi: "Regarding ESG, “the preference [to buy stocks in the index] is becoming stronger,” said Felix Goltz, research director at Scientific Beta. “People think [companies] are doing something harmful to society if they are not in the index so they care more about whether a stock is included.” Therefore, “demand should be more inelastic for stocks included in ESG benchmarks. That should lead to higher prices for these stocks,” Goltz added."

VettaFi 16/06/2022

"(...) Among those products are ESG funds, which have been rising in popularity over the last few years. Whether it’s buying individual stocks or ESG-focused ETFs, investors have been quick to follow the trend. Regarding ESG, “the preference [to buy stocks in the index] is becoming stronger,” said Felix Goltz, research director at Scientific Beta. “People think [companies] are doing something harmful to society if they are not in the index so they care more about whether a stock is included.” Therefore, “demand should be more inelastic for stocks included in ESG benchmarks. That should lead to higher prices for these stocks,” Goltz added. With more passive investing strategies in the capital markets, that means fewer opposing forces such as active management funds — as such, when markets move one direction, it’s amplified, thus causing more volatility. (...)"