Hartford Launches 1st ESG ETF

‘HEET’ aims to have half the carbon footprint of the Russell 1000.

Hartford launched its 12th ETF, as it seeks to build a foothold in the active ESG-minded market that it’s betting will grow in the U.S. in the coming years.

The Hartford Schroders ESG US Equity ETF (HEET) debuted on Cboe Global Markets Wednesday. The fund intends to beat the returns of the Russell 1000 index while aiming to have a portfolio with half of the carbon emissions divided by sales, according to its prospectus.

London-based investment manager Schroders will manage the fund, along with performing the data analysis required to determine whether the portfolio is staying under its carbon cap.

Anita Baldwin, Hartford’s head of research and sustainable investing, told ETF.com that the fund was made active so its managers can adapt strategies to changes in ESG definitions, rules and new data.

Baldwin said Hartford will start the fund with seed capital, but did not say how much.

Taking On A Short Large Cap ESG Market

With an expense ratio of 0.39%, HEET has the same cost to own as the American Century Sustainable Growth ETF (ESGY), and both aim to outperform the Russell 1000’s returns. ESGY launched in late June, and has so far attracted just $5.5 million in assets under management.

The broader segment of ESG active stock-picking out of large cap indexes is fairly out of vogue—or still in its early stages, depending on how you look at it. The four ETFs currently operating in the niche have less than $59 million in combined assets, with $36 million held by the Stance Equity ESG Large Cap Core ETF (STNC). Those funds also vary in liquidity, with ESGY notching a 45-day average spread of 0.05%, ranging on up to STNC’s 0.17% spread.

Baldwin acknowledged the market segment is currently thin, but Hartford is betting that it’ll gain steam as ESG investing grows in mainstream popularity in the U.S. based on the investing concept’s adoption abroad.

“I think that we are seeing interest in actively managed strategies in the ESG and sustainable investing space,” she said, “and we believe we’re setting ourselves up for what the future is going to look like.”

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