On Monday, the Impact Shares YWCA Women's Empowerment ETF began trading on the NYSE Arca exchange, under the ticker WOMN.
The ETF, which tracks the rules-based Morningstar Women's Empowerment Index, will cover large- and midcap companies that are "empowering to women," according to the prospectus.
This is the second ETF from nonprofit ETF issuer Impact Shares, which launched the Impact Shares NAACP Minority Empowerment ETF (NACP) last month (read: "Racial Equality ETF Debuts").
Leveraging Hands-On Expertise
Many ESG funds use third-party ranking and scoring systems to construct their benchmarks. However, WOMN, like its sister fund NACP, will evaluate companies based on social criteria identified and compiled by Equileap, a nonprofit promoting gender equality that uses publicly available information such as annual reports to assess more than 3,000 companies.
The YWCA, which represents 213 YWCA associations in 46 states and D.C., has a 160-year history in delivering direct services and community-based programs for women and families.
The thought process underpinning WOMN is in large part dictated by a nonprofit with deep, hands-on expertise in the social cause of intersectional gender health and equality.
YWCA functions as an advisory board of sorts, guiding the principles behind WOMN, but not which particular securities in which the fund may or may not invest. That's left up to Impact Shares, which serves as the fund's investment advisor.
“The WOMN ETF puts the power to empower women in everyone’s hands," said Alejandra Castillo, CEO of YWCA USA, in a press release announcing the launch. "It allows us to leverage the capital markets to further our 160-year mission to eliminate racism and empower women."
Defining ‘Women's Empowerment’
The term "women's empowerment" is something of a nebulous catchall. In the context of WOMN, however, it refers to companies with policies, products and/or services that rank highly in 19 criteria, along four particular vectors: gender balance in leadership and workforce; equal compensation and work life balance; policies promoting gender equality; and commitment, transparency and accountability.
In building the WOMN's index, companies are evaluated on such criteria as the proportion of women in roles of senior leadership and across the total workforce; equal pay policies and paid leave and/or flex-work options; the presence of comprehensive anti-harassment and equal opportunity policies; and corporate commitments to protect human rights and increase supply chain diversity. Those 19 criteria were developed by Equileap.
Building The Index
Morningstar includes the 200 highest-scoring companies in the final index, weighting them using an optimized weighting strategy, so as to maximize exposure to companies with higher women's empowerment practices. Individual companies are capped at a maximum 5% weighting.
Several exclusionary screens common to socially responsible funds are also applied. Excluded from the index are companies involved in weapons, gambling and tobacco; companies that have experienced certain legal controversies; and companies on the Norwegian Ethics Council List, which is a list of firms excluded from investment by the Norwegian government's pension fund.
In the initial portfolio, the top five holdings include Microsoft, Amazon, JPMorgan & Chase Co, Johnson & Johnson and Exxon Mobil.
Like NACP, WOMN will have an annual expenses of 0.76%
About Impact Shares
Texas-based Impact Shares is the industry's first nonprofit, white-label ETF issuer; the firm is structured as a tax-exempt 501(c)(3) charity. Its net advisory fee from WOMN will be donated to the YWCA, less operating expenses and working capital.
"It's a charitable giveback they can use as they see fit," Impact Shares CEO and founder Ethan Powell told ETF.com back in January (read: "'Social Alpha': Nonprofits Dive Into ETFs").
Impact Shares also plans to launch an international equity fund in collaboration with the United Nations Capital Development Fund next month.
Contact Lara Crigger at [email protected]