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The chance that Blackrock took and you're probably missing out

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By American ESG Group Staff

Nov 15, 2021

"Exchange Traded Funds are a kind of 'combos' that include several shares of a specific activity.

Within the offer of these ETFs is one that you should pay attention to. Like almost all financial instruments, it has an unattractive name: iShares ESG Aware MSCI USA.

Ishares is the ETF brand of Blackrock, the largest investment fund in the world and is the author of this 'combo', the cook who decides which stocks should be packed into this product.

The acronyms ESG refer to the words Environment, Social and Government. This ETF groups companies strict on environmental, social impact and corporate governance criteria, which indicates that power and decisions are not concentrated in one person.

All these are factors that favor companies to grow and be profitable in the following years.

This 'combo' called ESG Aware MSCI USA includes Apple, Microsoft, Amazon, Facebook, Alphabet or Google, Nvidia, Tesla, JPMorgan and Visa.

From Blackrock's perspective, the adjustment of money flows to technology companies will continue to grow because the traditional economy is no longer compatible with reality.

The world has already increased its average temperature 1.3 degrees Celsius, very close to the limit of 1.5 self-imposed by global leaders.

This year those government leaders could not agree during the United Nations COP 26, on a plan to stop warming above that figure, so the impact seems imminent, unless the change comes from the private sector.

Blackrock cautioned the matter in its 2021 Midyear Outlook report:

There is no roadmap to zero (emissions) and markets underestimate the profound changes that lie ahead. The path is unlikely to be straightforward, and this creates opportunities across all investment horizons.

This has a tactical implication: Blackrock funds are overweight the technology sector because it is better positioned for the green transition.

Larry Fink, the leader of Blackrock, has been warning about this for a long time and did so in a letter at the beginning of the year.

It's not just Blackrock and it's not just America. Check out the ETF called ChinaAMC CSI New Energy Automobile.

That 'combo' includes manufacturers of batteries and other equipment for a new generation of cars: Gotion, Eve Energy, Ganfeng Lithium… are among the names.

Money is moving towards a lower emissions economy. The fit will not be smooth and that is not why it is bad. That's what Fink and his team say, and they rarely get it wrong.

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