Daily ETF Watch: Sustainable Fund Planned

December 22, 2015

In a recent filing, Goldman Sachs—which has leapt into the ETF space this year with a number of smart-beta ETFshas outlined its plans to launch a fund based on a socially responsible version of the S&P 500. The Goldman Sachs S&P 500 Environmental & Socially Responsible ETF will start with the components of the S&P 500, and then screen out companies that do not meet certain criteria.

The methodology of the underlying index excludes “fossil-fuel-heavy industries” automatically, and also screens out companies with significant involvement in the tobacco and defense industries. The remaining S&P 500 components are then scored using RobecoSAM’s environmental and social criteria. According to the prospectus, the scores are designed to reflect how easily a company can adapt to such sustainability-related trends as climate change, resource scarcity and aging demographics. The index selects only the highest-scoring companies.

The underlying index weights its components by free-float market capitalization.

State Street Global Advisors launched a similar fund at the start of December. The SPDR S&P 500 Fossil Fuel Free ETF (SPYX) also starts with the components of the S&P 500 and excludes companies with crude oil, natural gas and thermal coal reserves. However, at launch, only 25 companies from the S&P 500 were excluded from SPYX’s underlying index, and the fund does not rely on any criteria beyond fossil fuel reserves to exclude or select companies.

The new filing did not include an expense ratio or ticker, but it did note that the fund would list on the NYSE Arca.


Contact Heather Bell at [email protected].

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