State Street is rolling out three new ESG-tinted index funds in an expansion of its sustainability-focused investment offerings.
The SPDR Bloomberg SASB Developed Markets Ex US ESG Select ETF (RDMX), the SPDR Bloomberg SASB Emerging Markets ESG Select ETF (REMG) and SPDR S&P SmallCap 600 ESG ETF (ESIX) all debuted on the NYSE Thursday.
RDMX and ESIX carry expense ratios of 0.12%, while REMG charges 0.16%. The three funds are passive, but use a sampling strategy to hold a smaller subset of their respective indexes from Bloomberg and S&P Dow Jones.
All three funds exclude companies involved in the production of tobacco, controversial weapons and thermal coal.
ESIX only screens out companies that generate more than 5% of their revenue from coal, but also eliminates companies in the bottom 5% of United National Global Compact rankings as determined by Arabesque. It also eliminates companies in the bottom quintile of their industries as determined by S&P Dow Jones’ ESG rankings.
From there, ESIX is weighted toward float-adjusted market capitalization and rebalances annually.
REMG and RMDX specifically use State Street’s proprietary “Responsibility Factor” methodology to orient its holdings for the highest possible score on its scale. Those funds rebalance quarterly.
The trio of new ETFs now brings State Street’s ESG fund count to 11, led by the $1.38 billion SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX). The launches appear to be part of a larger trend among major issuers of rolling out core portfolio strategies with an ESG tilt. BlackRock CEO Larry Fink announced plans to issue sustainable versions of existing ETFs in his 2020 letter to shareholders, while Invesco issued two ESG versions of its Nasdaq-100 ETFs last October.
“With the launch of ESIX, RDMX and REMG, investors can bring the potential benefits of ESG investing to the building blocks of a well-diversified equity portfolio,” said Brie Williams, SSgA’s head of practice management, in a statement.