A new player debuted in the ETF industry Thursday, as three actively managed Emerge EMPWR ETFs—all managed by women and abiding by Emerge’s proprietary environmental, social and governance criteria—launched on Cboe Global markets.
Simultaneously, funds with the same names launched on the NEO Exchange in Canada, which was recently acquired by Cboe Global markets and where Emerge has five ETFs already trading.
The U.S.-listed funds and their tickers are as follows:
- Emerge EMPWR Sustainable Dividend Equity ETF (EMCA)
- Emerge EMPWR Sustainable Global Core Equity ETF (EMZA)
- Emerge EMPWR Sustainable Emerging Markets Equity ETF (EMCH)
Each fund comes with an expense ratio of 0.95%.
Three New ETFs
The funds are all managed by woman-run subadvisors selected by Emerge, which then applies its ESG criteria to those firms’ selected portfolio. Those standards include taking into account ratings by third-party data providers and screening out companies that derive at least 20% of their revenues from weapons, thermal coal extraction, gambling, pornography or recreational cannabis, the prospectus says.
EMCA’s portfolio managers include Catherine Avery of Catherine Avery Investment Management and Emerge CEO and President Lisa Langley. The fund invests primarily in dividend-paying U.S. equities using a bottom-up approach to security selection.
Meanwhile, EMZA’s portfolio managers include Jane Liou Li of Zevin Asset Management and Langley. Its holdings must be drawn from the U.S. and at least two other countries. Zevin’s investment approach looks at fundamental research and global macro factors, with the goal of outperforming in declining markets and minimizing losses. The prospectus notes that the fund may underperform broad markets in a rising market environment.
EMCH is managed by Josephine Jimenez of Channing Global Advisors, as well as Langley. The subadvisor uses fundamental criteria to target securities in the emerging market category that represent attractive thematic growth opportunities and have a quality tilt. EMCH’s prospectus notes the fund can invest in China companies that are normally inaccessible to foreign investment through a variable interest entity.
Women Managers Showcased
Langley notes that based on self-reported data gathered by institutional databases, women manage 11% of assets. She estimates the true percentage is closer to 10%.
“It's just created even more barriers for women to actually being the trigger puller, who changes the stocks in a portfolio where the performance gets measured,” she said.
Langley added that women are often put on teams, possibly out of concern they could take maternity or family leave, which means they cannot lay claim to the track records.
“If you're running money on a team, you don't get to lay claim to that unique track record,” she explained. “To get that track record, some women have found they actually have to have the courage to hang out a shingle, so that they could create their own firm.”
Distribution is often a problem for such shops due to their small size, Langley added, noting that Emerge has spent the past few years researching and doing its due diligence on women portfolio managers as part of the process of bringing its funds to market. The current managers her firm has partnered with are notable for the depth of their experience and proven expertise in their respective strategies.
Langley also clarified that each of the subadvising firms advocates for ESG practices and has its own approach to the concept, but Emerge reviews each holding in the portfolios to ensure it aligns with her firm’s sustainability overlay.
“Our work doesn't replace their work, and their work doesn't replace our work,” she said.
Two more funds from Emerge are scheduled to launch Friday.
Contact Heather Bell at [email protected]