ETF newcomer Impact Shares has filed for a trio of ETFs, two of which are being developed alongside the National Association for the Advancement of Colored People and the YWCA Metropolitan Chicago, a press release said.
The three funds include the following and are slated to list on the NYSE Arca:
- Impact Shares YWCA Women’s Empowerment ETF (WOMN)
- Impact Shares NAACP Minority Empowerment ETF (NACP)
- Impact Shares Cause Based ETF
Each comes with an expense ratio of 0.75%.
WOMN and NACP are designed to reflect their sponsoring organizations’ respective values and social missions, the press release noted.
Empowering Women & Minorities
WOMN will target U.S.-listed companies with market capitalizations of at least $2 billion and fall into the 1,000 largest companies by market capitalization. They are selected based on the degree to which they exhibit characteristics that are empowering to women. The potential components are scored on criteria related to gender balance in leadership and workforce; equal compensation and work/life balance; promotion of gender equality; and transparency and accountability.
They are also evaluated based on whether there have been any “alarm bells” such as legal rulings that have found discriminatory or unethical practices. Companies assigned an alarm bell are excluded from consideration for the index for up to two years.
Companies are ranked based on their scores within their respective sectors.
NACP’s underlying index is also designed to target large-cap U.S.-listed companies that are empowering to minorities using a similar approach to WOMN’s index.
“NACP offers socially conscious investors the opportunity to allocate capital to incentivize companies to change their business practices and, in some cases, their products and services, to promote minority communities in the United States,” said Marvin Owens, senior director of the NAACP Economic Department, of the proposed ETF.
“By investing in NACP, we can reward companies that empower minorities and give our members another tool to have their voices heard,” he added.
Mirrored Criteria & Approach
The third ETF in the filing uses basic screening criteria and a scoring approach that mirror the other two planned ETFs, but the filing does not specify the nature of the causes it will seek to promote.
The funds are expected to launch in early 2018, according to the press release.
In a way, investors investing in these funds will be doubling down on their support for the funds’ causes. After all, Impact Shares is a registered charity and will donate the proceeds it earns from the ETFs to the charities that are backing them, the press release said.
While there are ESG ETFs that donate to the causes they promote via their strategies, so far there are no other issuers that actually qualify as charities. According to Impact Shares CEO Ethan Powell, the firm will be launching additional ETFs that focus on other causes, such as veterans; affordable health care and other health-related issues; affordable housing; and the arts.
Socially responsible investing has seen a significant jump in the ETF space in terms of new launches and asset inflows, and there are signs that investors are beginning to pay more attention to ESG-related concerns.
Contact Heather Bell at [email protected]