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Three ways ethical trackers may miss the mark

By Professional Advisor

by Victoria McKeever

Ahead of next week's Good Money Week, Kames Capital has identified three potential pitfalls for investors using ethical tracker funds

While the popularity of passive solutions with an environmental, social and governance (ESG) focus has grown in recent years, head of ESG research Ryan Smith argues investors are missing out on a "wealth of opportunities" overlooked by the rule-based products.

For instance, he points out that many trackers can end up overweight in large cap companies. They are also less able to engage with companies they own to improve ESG outcomes than active managers, notwithstanding issues around the individual outlook for companies which are included in such indices, he says.

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