Daily ETF Watch: Another Eco Fund Looms

ETFis plans to launch a ‘fossil-free’ ETF.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

ETF Series Solutions recently filed paperwork on a domestically focused ETF that excludes many—if not most—of the world’s leading energy companies. The FFI U.S. Large Cap Fossil Free ETF will track a modified market-cap-weighted subset of the stocks of the S&P 500 Index.

 

FFI Advisors is the fund’s investment advisor, and its parent company Fossil Free Indexes provides the fund’s underlying index. It also maintains the Carbon Underground 200, a list of the world’s top 200 coal, oil and gas companies, selected and ranked by their reported reserves’ carbon emissions.

 

The ETF’s underlying index screens out any S&P 500 components included in the Carbon Underground 200. From there, the index’s components are weighted by market capitalization, with individual weights capped at 1.25 percent of the index.

 

There’s been a small resurgence in interest in funds focusing on carbon emissions and fossil fuels after two leading ETF providers—BlackRock’s iShares and State Street Global Advisors—each rolled out low-carbon funds that are based on the same MSCI index.

 

The benchmark underlying the SPDR MSCI ACWI Low Carbon Target ETF (LOWC) and the iShares MSCI ACWI Low Carbon Target ETF (CRBN) reweights the stocks of the MSCI ACWI according to their carbon emissions, lending greater weight to companies with lower emissions. They have $93 million and $151 million in assets under management, respectively.

 

The ETFis filing did not include a ticker or an expense ratio.

 

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.