Daily ETF Watch: 2 Sustainable Funds Filed

Northern Trust’s FlexShares unit plans U.S. and global socially responsible ETFs.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Northern Trust’s ETF arm, FlexShares, has filed for two ETFs that will use an approach focused on environmental, social and governance (ESG) criteria. The FlexShares Stoxx US ESG Impact Index Fund and the FlexShares Stoxx Global ESG Impact Index Fund will both track indexes with similar methodologies that select and weight components based on their ESG scores.

Both fund benchmarks are subsets of the Stoxx Global 1800 Index, though the U.S. fund only selects U.S. companies. Each index takes the top 50% of companies as determined by their ESG scores and weights them based on their scores, with higher-scoring companies receiving larger weights in the index. Individual company weights are limited to 5% of the index at rebalancing, and companies that engage in tobacco- or weapons-related business activities are excluded entirely.

The U.S. index has approximately 270 companies, while the global index includes more than 600.

The two funds are set to list on the Nasdaq, but the filing did not include tickers or expense ratios.

There’s been a surge of sustainability-related launches and filings lately, with launches by iShares and State Street Global Advisors, while other firms have made filings in the area, including Global X and OWLshares.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.