A FlexShares senior strategist breaks down why ESG and infrastructure will be the dominant ETF themes of 2021– and shares 3 common mistakes to avoid when selecting an investment vehicle

A FlexShares senior strategist breaks down why ESG and infrastructure will be the dominant ETF themes of 2021– and shares 3 common mistakes to avoid when selecting an investment vehicle

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020

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  • Joe Biden is likely to bring ESG ETFs as well as infrastructure investing into greater focus.
  • ESG and infrastructure will be the top ETF themes of 2021, according to Chris Hummer. 
  • He shared 3 mistakes to avoid when selecting an investment vehicle, emphasizing diversification.

With Joe Biden pushing for a mammoth infrastructure package as well as his clean energy initiatives taken through executive orders, ESG and infrastructure ETFs offer promising opportunities for investors looking to dip their toes in these growing themes, says Chris Hummer, a senior investment strategist at FlexShares. 

ESG investing has been gaining traction for years now, but the pandemic and new administration have pushed the popularity of environmental, social, and corporate governance criteria through the roof.

Within his first month in office, Joe Biden signed climate change executive orders, rejoined the Paris Agreement, and nominated ESG investment allies like Marty Walsh for higher-ranking government positions. 

As for infrastructure, the pandemic has highlighted our need for cell phone towers, data centers and fiber optic cables. The recent power shortage in Texas this week also helps shine a light on how dependent we are on these types of infrastructures. 

“From infrastructure, we are seeing more people looking at this as a distinct asset class. We have been an advocate for years now, and it has paid off in our own asset allocation models.” Hummer told Insider.

He highlighted that energy infrastructure, just like transportation and electricity are, in fact, key components of the infrastructure complex, but there is much more to it today. He argued that communication technology has been just as mission critical as water, waste management and energy utilities this past year, given the structural shifts brought about by the pandemic. 

3 mistakes to avoid when choosing investment vehicles 

The first is to avoid looking at infrastructure ETFs that focus on just one sector because those don’t gain the benefits of having broad exposure. Concentration in one area like transportation and energy might leave investors out of opportunities provided by the whole com

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