Daily ETF Watch: Climate Leader Fund Debuts

November 19, 2015

Today saw the launch of another fund targeting climate change. The Etho Climate Leadership U.S. ETF (ETHO) selects its companies based on their carbon impact, which is based on each firm’s total greenhouse gas emissions from all of its operations. However, ETHO also has an added environment, social and government issues element.

Eligible companies must have at least $100 million in market capitalization and cannot be classified as an energy sector company, according to the prospectus. Potential components also cannot be involved in the aerospace, tobacco, defense, gambling, gold or silver industries or subindustries.

General sustainability issues can also affect a company’s inclusion. Companies targeted by nongovernmental organizations for poor sustainability practices can be excluded from the index, while those whose products contribute to strong sustainability practices that counterbalance other negative criteria can be included.

The prospectus notes that the index has no set component count and includes all U.S. companies meeting the index criteria. Typically, it will have between 400 and 430 components from the small-, mid- and large-cap segments.

The fund listed on the NYSE Arca and comes with an expense ratio of 0.75%.

WisdomTree Launches

WisdomTree added another fund to its lineup of currency-hedged ETFs. The WisdomTree Global Hedged SmallCap Dividend Fund (HGSD) is the currency-hedged version of the WisdomTree Global SmallCap Dividend Fund (GSD), which rolled out earlier this month.

The index for both funds includes companies drawn from the bottom 5% of WisdomTree’s investment universe, as defined by the WisdomTree Global Dividend Index. The components must have at least $200 million in market capitalization in addition to meeting liquidity requirements. The index selects the largest 1,000 companies after the screens have been applied to the selection pool and weights them by dividends paid.

HGSD, like GSD, comes with an expense ratio of 0.43%.

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