MOST INNOVATIVE ISSUER OF THE YEAR
WINNER: Impact Shares
Newcomer Impact Shares offers a spin on socially responsible investing by working directly with charities and nonprofit organizations that support specific causes to develop its funds. The firm is registered as a tax-exempt nonprofit 501(c)(3) organization, and donates 100% of its advisor fees back to the charities it works with, less operating expenses and working capital.
So far, Impact Shares has partnered with the NAACP on its initial fund, the Impact Shares NAACP Minority Empowerment ETF (NACP); the YWCA on the Impact Shares YWCA Women’s Empowerment ETF (WOMN); and the UN Capital Development Fund for the Impact Shares Sustainable Development Goals Global Equity ETF (SDGA). Partner charities act as sorts of advisory boards that set the funds’ guiding principles, while Impact Shares and the firm’s third-party index provider do the hard work of portfolio construction and management.
While there have previously been ETFs that donate some of their proceeds to a particular charity, the Impact Shares funds are the only ones to work directly with charities themselves, as well as to kick back 100% of the proceeds. In this way, investors can provide twofold support to causes they believe in, both through investing in companies that advance each fund’s targeted cause and spurring the cash donation of the management fees.
The Impact Shares are one of the most direct ways so far for investors to make a positive impact through their portfolio choices.
NEW ETF ISSUER OF THE YEAR
WINNER: Defiance ETFs
Sometimes it’s about the attitude and focus of a new ETF issuer coming to the industry rather than a quick collection of assets under management. And as its name implies, 2018’s ETF Issuer of the Year Defiance ETFs is poking at themes that are cutting edge and that the big boys seem to be ignoring.
The digital world morphs daily into new directions and themes, and Defiance recognizes this, launching ETFs to represent what’s the hot tech trend faster than established ETF players. It’s also focused on giving advisors tools to serve the next generation of investors, expected to materialize as the baby boomer generation passes on its wealth.
The firm, which is committed to passive rather than active investing, in September debuted the Defiance Quantum ETF (QTUM), a fund that invests in companies involved with quantum computing. Defiance also last year launched the Defiance Future Tech ETF (AUGR), which tracks virtual/augmented reality-related equities.
In November, Defiance filed for seven more ETFs, including the Defiance Next Gen Connectivity ETF (FIVG), which launched in March 2019. FIVG focuses on companies behind the next generation of telecom technology. Five of the other funds in the filing would target the small-cap segments of various disruptive technologies.
ETFs have been the No. 1 disruptor in the investment space for a while now, and are even defiant in some ways. Defiance ETFs is the newest entrant in the space to carry those themes.