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FTSE4Good Index Series

FTSE4Good Index Series
InvestingSustainable InvestingSocially Responsible Investing

The FTSE4Good Index Series is a rundown of environmental, social, and governance (ESG) stock indexes made and kept up with by the Financial Times Stock Exchange-Russell Group (FTSE).

What Is the FTSE4Good Index Series?

The FTSE4Good Index Series is an assortment of socially responsible, or ESG stock indexes administered by the Financial Times Stock Exchange-Russell Group (FTSE). The purpose of these indexes is to feature companies that score profoundly in measures of corporate social responsibility (CSR).

The indexes each follow severe environmental, social, and corporate governance criteria that make them suitable for the purpose of benchmarking and can be utilized as apparatuses in the creation of financial products, for example, institutional and retail funds, exchange-traded funds (ETFs), and derivatives.

How the FTSE4Good Index Series Works

Socially responsible investing (SRI) has been a developing trend among investors. Due, in part, to the leadership of organizations, for example, the United Nations Principles for Responsible Investing (PRI), there has been a developing demand in recent years for investment products tailored to the necessities of socially conscious investors.

The FTSE4Good Index Series, which sent off in 2001, is one such model. As opposed to alluding to a specific equity index, the FTSE4Good Index Series rather includes several SRI indexes, each with its own geographic concentration. For instance, the series remembers specific indexes for companies for the United States, Australia, Japan, and Latin America, among others.

Transparent management and obviously defined environmental, social, and corporate governance criteria make FTSE4Good indexes suitable apparatuses to be utilized as:

  • Financial products: as apparatuses in the creation of index-following investments, financial instruments, or fund products zeroed in on sustainable investment.
  • Research: to recognize environmentally and socially sustainable companies.
  • Reference: as a transparent and developing global ESG standard against which companies can evaluate their progress and accomplishment.
  • Benchmarking: as a benchmark index to follow the performance of sustainable investment portfolios.

Investors can subsequently involve the index as a reference point for individual stock selection, for example, by choosing investments from the index's top holdings. As of December 31st, 2019, for instance, the main 10 holdings of the U.S.- based index incorporated several notable technology companies, like Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and Meta, formerly Facebook, (META).

On the other hand, investors can choose products that utilization the FTSE4Good Index Series as an investment benchmark. One such model is the Vanguard FTSE Social Index Fund (VFTSX), a mutual fund whose performance is measured against the FTSE4Good US Select Index.

Utilizing the FTSE4Good Index Series

To be remembered for the FTSE4Good Index Series, companies must score exceptionally in measures of environmental, social, and governance (ESG) practices. In practice, this expects companies to have strong policies in areas like respect for human rights, internal labor relations and working environment safety, lack of real or perceived corruption, and the environmental sustainability of their supply chains.

To decide if these standards are being kept, an independent committee of specialists, in counsel with non-governmental organizations (NGOs), scholastics, government bodies, and investors, jointly creates and refreshes the ESG standards.

Critically, a few companies are completely excluded from the index series on account of their business models, including tobacco companies and weapons manufacturers. Oil and gas companies are not excused wild; all things being equal, they are assessed in view of their efforts to reduce the production of non-renewable energy sources and advance their business into additional environmentally friendly operations.

Instances of FTSE4Good Indexes

Several stock indexes are incorporated as a FTSE4Good product. The following is excerpted from the FTSE-Russell Website:

  • The FTSE4Good E criteria are applied to the FTSE4Good Emerging Indexes, which covers north of 20 emerging countries, and was sent off in 2016.
  • The FTSE4Good ASEAN 5 Index constituents are chosen and separated agreement with transparent and defined ESG criteria intended to distinguish those companies listed on the leading ASEAN financial markets.
  • FTSE Group has partnered with Bolsas y Mercados Espa\u00f1oles (BME) to make the FTSE4Good IBEX Index. Constituents comprise companies in the BME's IBEX 35 Index and the FTSE Spain All Cap Index that meet the FTSE4Good Index Series qualification criteria.
  • FTSE4Good Developed Minimum Variance Index looks to accomplish reduced index volatility in view of historical return data. The series is intended to reflect market participants' craving for an index that offers likely improvements to the gamble reward ratio while keeping up with full allocation to the pertinent equity market.
  • The FTSE4Good Bursa Malaysia Index constituents are chosen from the constituents of the FTSE Bursa Malaysia EMAS Index and separated understanding with the transparent and defined ESG criteria.
  • FTSE Russell has partnered with Taiwan Index Plus (TIP) Corporation on the FTSE4Good TIP Taiwan ESG Index. The index is intended to measure the performance of companies on the Taiwan Stock Exchange.

Features

  • Investors can utilize the indexes either for individual stock selection or as the basis for investment products, for example, mutual funds and exchange-traded funds (ETFs).
  • It contains several individual stock indexes, each tailored for a particular geographic region.
  • The FTSE4Good Index Series is a series of SRI/ESG equity indexes that incorporate companies with positive notorieties for corporate responsibility.

FAQ

How Do I Get Into FTSE4Good?

Investors can track down funds at different financiers that mirror the performance of the FTSE4Good indices. A company that needs to be listed on one of these indexes must meet certain criteria to be incorporated.

How Does the FTSE4Good Index Work?

The series records companies that meet specific criteria intended to address the issues of investors worried about companies' environmental, social, and governance practices.

What Is the FTSE4Good Index?

The FTSE4Good Index series is a rundown of indices made by FTSE Russell to monitor the performance of companies that meet specific criteria.