IndexIQ Adds Pair of ESG-Focused ETFs

October 26, 2022

IndexIQ Advisors, New York Life Investments’ exchange-traded funds arm, added a pair of ETFs to its lineup on Tuesday as it taps into growing demand for sustainable investments.  

The IQ MacKay ESG High Income ETF (IQHI) and the IQ Candriam ESG U.S. Mid Cap Equity ETF (IQSM) will focus on companies that incorporate environmental, social and governance criteria. 

Despite a recent backlash, demand for investments that follow ESG guidelines is soaring. Assets invested according to ESG criteria are expected to jump to $33.9 trillion by 2026, from $18.4 trillion last year, PwC said earlier this month. Funds dedicated to ESG invest in companies that are judged to behave in socially responsible ways. 

“ESG strategies are growing in popularity and there is investor demand,” Kirk Lehneis, president of IndexIQ ETFs and chief operating officer of New York Life Investment Management, wrote in an email to ETF.com. 

Both IQHI and IQSM are listed on the NYSE Arca, and have expense ratios of 0.40% and 0.15%, respectively. The ETFs compete with sustainability-focused funds such as the Thrivent Small-Mid Cap ESG ETF (TSME) and the Vanguard ESG U.S. Stock ETF (ESGV), among others, including IndexIQ’s own IQ MacKay ESG Core Plus Bond ETF (ESGB)

An actively managed high yield strategy fund, IQHI tracks the Bloomberg Very Liquid High Yield Index, which seeks to maximize current income. According to the prospectus, the fund will invest in high yield debt, known as junk bonds, as well as U.S. and overseas corporate debt and other income-generating securities.  

IQSM is passively managed and tracks the IQ Candriam ESG U.S. Mid Cap Equity Index, which provides exposure to a broadly diversified U.S. midcap portfolio consisting of companies that meet ESG criteria established by Candriam—a European asset manager known for sustainable investing initiatives. 

 

Contact Zoya Mirza at [email protected] 

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