Today, VictoryShares launched a trio of actively managed ESG ETFs, including two fixed income funds. The funds and their expense ratios are as follows:
- VictoryShares THB Mid Cap ESG ETF (MDCP), 0.55%
- VictoryShares ESG Core Plus Bond ETF (UBND), 0.40%
- VictoryShares ESG Corporate Bond ETF (UCRD), 0.40%
All three ETFs list on the Nasdaq exchange.
MDCP invests in companies that are components of the Russell Mid Cap Index and uses an in-house process to identify companies with strong quality and value characteristics as well as the potential for sustainable growth.
Its ESG evaluation process is also a proprietary in-house process used by fund manager THB Asset Management that draws from a wide range of sources to consider 16 areas falling within the environmental, social and governance categories. They range from climate change to financial reporting, according to the prospectus.
Meanwhile, the two bond ETFs’ investment strategies for fixed income largely rely on evaluations of economic factors, industry developments and a debt-issuing company’s financial stability, their prospectuses say. Their portfolios are mainly investment grade, but can have a 20% (UBND) or a 10% (UCRD) weighting to junk bonds.
Both use another in-house ESG evaluation system from fund manager USAA Investments that covers a range of criteria and assigns scores from 1 (lowest) to 5 (highest).
The environmental portion of the evaluation focuses mainly on water usage policy and greenhouse gas emissions, while the social portion targets issues like safety records and management diversity. Governance is primarily focused on leadership inclusivity and corporate behavior and ethics, according to the funds’ documents.
The methodology for both funds generally selects components from the top three scoring tiers, but UCRD can include components from the lowest two tiers, which are limited to 20% of the portfolio.
“Active ETFs continue to gain traction with investors seeking to access managers who have proven successful in mutual funds and other investment vehicles,” said VictoryShares President Mannik Dhillon in a press release.
Contact Heather Bell at [email protected]