This fund lands in the 10% of strategies with the lowest ESG risk in the Trading Tools category, earning it the highest Morningstar Sustainability Rating of 5 globes. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.
One key area of strength for MicroSectors™ St FANG&Inn 3X Inv Ld ETNs is its low Morningstar Portfolio Carbon Risk Score of 2.65 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy. Currently, the fund's involvement in fossil fuels is negligible, and compares favorably with 10.36% for its average peer.
One potential issue for a sustainability-focused investor is that MicroSectors™ St FANG&Inn 3X Inv Ld ETNs doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. The fund exhibits high exposure (13.33%) to companies with severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that may negatively affect stakeholders, the environment, or the company’s operations.