It's self-evident: The goal of any investment is to make money for investors. That's even true for environmental, social and governance (ESG) ETFs, to which investors have increasingly turned in order to put their investment dollars to positive use.
But what if, in addition to maximizing shareholder return, an ETF could also raise money to help fund small regional farms in Tanzania; or to modernize food markets in Uganda; or deliver mobile payments and banking to small business owners in Nepal? What if an ETF could actually be an instrument of philanthropy as well as investment return?
That's the gist behind the Impact Shares Sustainable Development Goals Global Equity ETF (SDGA), an ETF whose partner charity, the United Nations Capital Defense Fund (UNCDF), works to alleviate poverty and economic hardship on a global scale.
SDGA is the third and most recent launch by Impact Shares, the industry's first nonprofit ETF issuer. Due to the unique way the Impact Shares ETFs are structured, every dollar invested in SDGA translates into money for economic development projects worldwide.
It's a bold concept. However, whether SDGA can actually raise enough money to make a meaningful difference is yet to be seen.
ETF For Peace & Prosperity
SDGA tracks a universe of global stocks that rank highly in achievement among the UN's 17 sustainable development goals (SDGs) (read: "UN-Based Socially Responsible ETF Debuts").
The SDGs are a blueprint of global social and economy policy goals—such as quality education for all, or sustainably developed cities—that, if achieved, would lead to "peace and prosperity for both people and the planet," according to the UN's website.
However, "without capital, the SDGs are a great aspiration that's never going to be realized," said Francesco Ambrogetti, innovative finance and partnership specialist for the UNCDF and partner on SDGA.
That's where the Impact Shares ETF comes in. SDGA invests in a number of ESG all-star companies that operate or sell products in the 47 least developed nations in the world—where the UNCDF concentrates its efforts. By allocating capital to these predominately multinational, large cap companies, SDGA helps them develop local supply chains, create jobs and support regional economic infrastructure in lesser developed regions, says Ambrogetti. These include stocks like Microsoft (MSFT), Nestle S.A. and Bank of America Co. (BAC), the top three holdings in SDGA's portfolio, aside from an 18% allocation to mutual funds.
(Use our stock finder tool to find an ETF’s allocation to a certain stock.)
These companies are "making those countries a better place to sell their products," explained Ambrogetti, "while at the same time improving employment, education and human rights."
Year-to-date, SDGA has seen a 13% return. In contrast, VTI, a broad portfolio of global equities, has returned 16%.
SDGA Year-To-Date Performance
Source: ETF.com; data as of 4/24, 2019