Etho Capital, a US-based sustainable investment manager, has launched the ETHO ETF (ETHO), a broad based, diversified, socially responsible and fossil fuel-free equity exchange-traded fund with no exposure to the energy sector.
The ETHO ETF aims to provide exposure to companies scoring well on ESG criteria while avoiding those involved in carbon emission heavy operations.
Investors are increasingly looking to environmental, social and governance (ESG) based investment strategies, such as the ETHO ETF, in an effort to withdraw support from companies who are contributing to the risk of climate change and are exposed to the economic risks that go hand in hand with industries such as the energy sector. By instead supporting companies which are run in a sustainable manner with regards to corporate responsibility, society and the environment, investors may also harvest additional long-term returns.
Conor Platt, Co-Founder, Chief Executive Officer and Chief Investment Officer of Etho Capital, commented: “Our research shows that investing in climate-efficient companies can yield higher returns. Investors want options that prioritise both profits and the planet, and ETHO is helping fill these needs. The ETHO ETF allows investors to put their money toward supporting the most sustainable, forward-looking companies in the world whose management teams are planning for our climate in a changing, competitive landscape.”
For institutions ESG-based investment is becoming part of their fiduciary duty more often when making investment decisions, while individuals are increasingly looking to align their investments with their values. The ETF will also serve the investment requirements of the growing movement to divest portfolios from fossil fuels and invest in a clean energy future.
According to Etho Capital, in September, it was announced that institutions and individuals representing more than $2.6tn in assets under management are committed to fossil fuel divestment. This number is likely to grow, as 84% of Millennials say they favour ESG investing, and roughly $41tn will pass to Millennials from baby boomers over the next 35 years.
Ian Monroe, Co-Founder, President and Chief Sustainability Officer of Etho Capital: “Investors of all ages are increasingly concerned about climate change, but younger investors are especially focused on aligning their portfolios with long-term sustainability because they have the most to lose from the ripple effects of a rapidly warming world. At Etho Capital, our goal is to empower everyone to invest in climate sustainability and social responsibility while gaining competitive financial returns. The ETHO ETF combines all these elements and makes them accessible to the full spectrum of investors, ranging from large institutions to college students investing for the first time.”
The ETF is based on the Etho Climate Leadership Index, an index that is completely divested of fossil fuel companies, rigorously screened for ESG criteria and composed of 400 of the most climate-efficient companies across sectors. The ETHO ETF offers investors a product with broad diversification while remaining socially and environmentally responsible.
Launched in partnership with Factor Advisors, a subsidiary of private label ETF solutions provider, ETF Managers Group, the fund is listed on NYSE Arca and carries a total expense ratio of 0.75%.