FT Cboe Vest Buffered Allctn Dfnsv ETF may not appeal to sustainability-conscious investors.
FT Cboe Vest Buffered Allctn Dfnsv ETF's holdings are exposed to average levels of ESG risk relative to those of its peers in the Options Trading category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, such as climate change and inequalities, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.
FT Cboe Vest Buffered Allctn Dfnsv ETF has a Carbon Risk Score of 7.48, indicating portfolio companies face low carbon-related risks in the transition to a low-carbon economy. Currently, the fund has 9.21% involvement in fossil fuels, which compares favorably with 9.76% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas.
One potential issue for a sustainability-focused investor is that FT Cboe Vest Buffered Allctn Dfnsv ETF doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes. The fund has relatively high exposure (9.78%) to companies with high or 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.