SUSL Is A Good Option For People Seeking ESG Investing

Summary

• If an investor chose to invest in iShares' industry-specific ETFs instead of investing in the iShares ESG MSCI USA Leaders ETF, they would have gotten almost the same return.
• During the period analyzed, if you invested in SUSL instead of IVV, you would have had an alpha of 2.4%.
• SUSL is well-diversified (holds 290 companies) and its top 10 investments account for about 30% of the portfolio.

While I was gathering the data necessary to analyze the iShares ESG MSCI USA Leaders ETF (NASDAQ:SUSL), I argued with myself if I should publish this data or not. The ESG vs. non-ESG discussion can become one of those controversial discussions that never ends. You know, the same thing that happens when you discuss religion or politics.

I hope to answer two questions with my analysis. My first question is, is it better to invest in SUSL or just match SUSL's industry weights without focusing on ESG criteria? My next question is, did SUSL provide its investors with alpha during the period analyzed in my study?

The Detail Behind The Data

SUSL is an ETF that focuses on stocks that meet iShares' ESG criteria and are companies based in the United States. I used iShares' SUSL Prospectus to find the by sector allocation, and I used Seeking Alpha to find the prices needed to perform the study. I limited the comparison ETFs to only iShares ETFs since SUSL is an iShares ETF; it only makes sense to compare it to other iShares ETFs in my opinion.

My risk-free rate used in this study is 0.73%, the ten-year US Treasury note. My analysis period was from 05/31/2019 until 06/16/2020. SUSL was launched on May 7th, 2019, and I wanted to give it a couple of weeks of operating time while still being able to analyze a whole year. The beta that I used for SUSL was from Seeking Alpha. The beta was for only 12 months and not 24 months, which is less than optimal for an alpha calculation.

Invest In SUSL Or Match Its Portfolio's Industry Weights

In this part of the analysis, I am not taking into consideration the amount of money or time necessary to invest in eleven ETFs

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, but may initiate a long position in SUSL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.