ESG index-based funds generally have ahigher fee structurethan traditional index funds due to additional costs related toESG data acquisition, portfolio screening, and research. Unlike conventional passive funds, ESG index funds requireactive decision-makingto select securities based on sustainability criteria, which increases operational expenses.
Moreover, ESG indices often havelower liquidityandhigher tracking errorcompared to traditional benchmarks, further contributing to cost differences.
[References:, Morningstar ESG Fund Fee Analysis (2023), MSCI ESG Index Cost Comparisons, CFA Institute Research on ESG Fund Expenses, ========, , ]
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