Claymore Investments, the Canadian asset management arm of U.S. exchange-traded fund provider Claymore Securities, is joining the ranks of the green-minded asset managers by launching a global sustainability ETF.
The ETF launch, scheduled for some time in the next two weeks, coincides with the creation by KLD Indexes and Jantzi Research of the Global Environment 60 Index (GE60), to be published by FTSE and used by Claymore for the new ETF.
The Claymore fund has not been assigned a ticker yet, but will trade on the Toronto Stock Exchange.
While there has been a rash of sustainability and environmentally themed ETFs in the U.S., Claymore believes the new ETF will be the first such portfolio in the Canadian ETF market.
"Canada is a fairly small market and the first-mover advantage is less important than long-term asset gathering," said Som Seif, chief executive of Claymore's Canadian asset manager. "You always want to be first with an idea, but we would still think this investment idea made sense if we were second."
The Global Environment 60 Index components are pure-play global companies that derive 50% or more of their business from products or services related to one of five environmental themes: alternative energy, clean technology, sustainable water, green building and pollution prevention.
The index is equally weighted between each theme, with KLD Indexes and Jantzi selecting the top 12 companies by float-adjusted market capitalization in each area, for a total of 60 companies.
The Global Environment 60 Index is to be the first benchmark in a new Global Environment Index (GEI) series created by KLD and Jantzi and published by FTSE. Indexes will be created covering each of the five major sustainability themes separately, as well as a composite index incorporating all of the constituents across the five themed indexes.
While the additional indexes could serve as the basis for ETFs, Seif said the Canadian market is not big enough to merit additional launches. Claymore Securities, the U.S. parent company, said at this point it is not launching any ETFs based on the KLD Jantzi indexes.
The index providers define the five major themes in this way:
- Sustainable Water: products and services focused on water and wastewater treatment; water infrastructure; or water resource management and efficiency.
- Alternative Energy: products and services that promote the generation of power using renewable or cleaner sources (i.e., cleaner than conventional fossil fuels) or the development of clean or cleaner power and energy technology.
- Clean Technology: Products and services that deliver equal or superior performance while reducing energy use and natural resource consumption when compared to conventional offerings.
- Green Building: Building material suppliers; home builders; or property managers that directly support or have a confirmed commitment to achieving sustainable building standards (i.e., LEED, BREEAM, Energy Star Homes or other recognized standards of sustainable building) for all new construction.
- Pollution Prevention: Products and services focused on pollution prevention, waste minimization or recycling, including source reduction, in-process recycling, reuse/reclamation, resource recovery and treatment/abatement.
The prospectus for the new Claymore ETF can be found here.