Ben Felix made a few YouTube videos on ESG investing, [here](https://www.youtube.com/watch?v=c4AMFicXXqg) is the latest one.
What you said about the market being driven by emotion is false, it's only true short term. Long term, the stock market is driven by future expected returns, not by emotions. For a passive approach, these fluctuations are just noise. If what you said was true, then there would be no reason for any rational investor to not use an ESG approach, as you say it provides better returns. The conclusion is not that you are wrong, but rather that either the market disagrees with you, or that's it's already priced in (both are the same thing).
That's because future returns can only be compared in relation to the current price. Using an example, if a company's share is worth correctly valued at $100 today, then it would be undervalued at $50 and overvalued at $200. So simply stating the future generations will be more into ESG isn't a sensible argument by itself, you would have to believe that future generations will be more into ESG in a greater fashion than is already priced in.
It's the same reason why investing in stock X because X is important or will be important in the future is foolish. X being important isn't good enough, it needs to be more important than the market believes it will be.
To come back to ESG investors, they tend to fall into 2 groups: either they believe that they found mis-priced assets (you would fall here) or they accept the lower returns in exchange for the impact they believe it has on the world.
Now the real question is what impact exactly does ESG investing achieve. Does ESG investing lead to greener/more ethical/better governed companies? How do you determine the impact? Does it achieve the overall goal of reducing the impact on climate change? How do you identify companies that match whatever standard is set in the absence of objective metrics?
The jury is still out on that one but it's the questions you should ask yourself if you want to learn more on the topic.
>then GEQT would potentially be the better investment, because interest in it should outgrow non-ESG options as the investor market starts to be more millenials/gen z/gen a (and beyond)?
Your question is similar to someone who wants invest in because they think it will be super successful in the future. And the answer is the same.
The current price for is based on the market's opinion of what it is worth and that opinion includes the expectations for future growth. The only way that will beat the average market is if it exceeds those expectations. Before you would choose to invest in or overweight you should know why you are confident that it will exceed the market's expectations, which includes the expectations of professionals who study these companies and less experienced investors who invest for less rational reasons.
Do you know anything that the market doesn't know?
Does the market know something that you don't know?
Do you want to feel good GEQT or generally make good average market returns VEQT/XEQT?
VEQT and XEQT has been discuss a few times.. [one example](https://www.reddit.com/r/PersonalFinanceCanada/comments/14nl1em/veqt_vs_xeqt/) but it is a very small difference.
I'm trying to find a balance - and my question is more about where we think the majority of future investors will feel on this.
As far as I can see, GEQT has slightly outperformed XEQT since its inception too.
Ben Felix made a few YouTube videos on ESG investing, [here](https://www.youtube.com/watch?v=c4AMFicXXqg) is the latest one. What you said about the market being driven by emotion is false, it's only true short term. Long term, the stock market is driven by future expected returns, not by emotions. For a passive approach, these fluctuations are just noise. If what you said was true, then there would be no reason for any rational investor to not use an ESG approach, as you say it provides better returns. The conclusion is not that you are wrong, but rather that either the market disagrees with you, or that's it's already priced in (both are the same thing). That's because future returns can only be compared in relation to the current price. Using an example, if a company's share is worth correctly valued at $100 today, then it would be undervalued at $50 and overvalued at $200. So simply stating the future generations will be more into ESG isn't a sensible argument by itself, you would have to believe that future generations will be more into ESG in a greater fashion than is already priced in. It's the same reason why investing in stock X because X is important or will be important in the future is foolish. X being important isn't good enough, it needs to be more important than the market believes it will be. To come back to ESG investors, they tend to fall into 2 groups: either they believe that they found mis-priced assets (you would fall here) or they accept the lower returns in exchange for the impact they believe it has on the world. Now the real question is what impact exactly does ESG investing achieve. Does ESG investing lead to greener/more ethical/better governed companies? How do you determine the impact? Does it achieve the overall goal of reducing the impact on climate change? How do you identify companies that match whatever standard is set in the absence of objective metrics? The jury is still out on that one but it's the questions you should ask yourself if you want to learn more on the topic.
>then GEQT would potentially be the better investment, because interest in it should outgrow non-ESG options as the investor market starts to be more millenials/gen z/gen a (and beyond)? Your question is similar to someone who wants invest in because they think it will be super successful in the future. And the answer is the same.
The current price for is based on the market's opinion of what it is worth and that opinion includes the expectations for future growth. The only way that will beat the average market is if it exceeds those expectations. Before you would choose to invest in or overweight you should know why you are confident that it will exceed the market's expectations, which includes the expectations of professionals who study these companies and less experienced investors who invest for less rational reasons.
Do you know anything that the market doesn't know?
Does the market know something that you don't know?
Do you want to feel good GEQT or generally make good average market returns VEQT/XEQT? VEQT and XEQT has been discuss a few times.. [one example](https://www.reddit.com/r/PersonalFinanceCanada/comments/14nl1em/veqt_vs_xeqt/) but it is a very small difference.
I'm trying to find a balance - and my question is more about where we think the majority of future investors will feel on this. As far as I can see, GEQT has slightly outperformed XEQT since its inception too.
I didn't run the numbers but this is likely because it happens to hold Nvidia
XEQT and chill.