ESG index funds are scorching. That could be a dangerous factor for traders

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In terms of investing, the notion you can earn cash available in the market and be ok with your investments on the similar time could be very compelling, particularly amongst youthful traders from the millennial and Gen Z demographics. That is the important thing purpose why environmental, social and governance (ESG) screens are being extra generally used to guage shares by fund managers — together with the world’s greatest of all, BlackRock — and socially accountable investing is attracting extra property.

In keeping with Morningstar, estimated flows into open-end and exchange-traded sustainable funds, the general class of ESG and SRI funds, reached $13.5 billion by way of this previous September. That is not an enormous quantity relative to the general dimension of the fund trade — which is measured within the trillions of {dollars} — neither is it large in comparison with general ETF flows, which have reached tons of of billions of {dollars} yearly lately. However it’s a large leap from the $5.5 billion these funds attracted in all of…