Impact Shares has launched a new actively managed ETF providing exposure to mortgage-backed securities (MBS) backed by home loans made to traditionally underserved communities.
David Sand, Chief Impact Strategist at Community Capital Management.
The Impact Shares Affordable Housing MBS ETF (OWNS US) has been listed on NYSE Arca and comes with an expense ratio of 0.30%.
The fund is sub-advised by Community Capital Management, a Florida-based investment manager focused on impact investing within fixed income markets.
The strategy invests in MBS with underlying home loans for areas where more than 50% of the population is non-white and at least 40% of the population is living at or below the poverty line, according to census tract data.
In an effort to encourage the elevation of areas with persistent poverty, the fund will also include MBS with home loans from counties where 20% or more of the population has lived in poverty for more than 20 years.
All of the MBS in which the fund invests are issued and/or guaranteed by government-sponsored enterprises such as Fannie Mae, Freddie Mac, and Ginnie Mae.
When making investment decisions, Community Capital Management will consider the coupon payments of the qualifying mortgage-backed security pools in order to manage the prepayment and extension risks of the portfolio.
The fund comes to market with $30 million in assets courtesy of seed investors including Allianz Life Insurance Company of North America, BancorpSouth, Woodforest National Bank, and the California Community Foundation, among other banks, insurers, and foundations.
According to Community Capital Management, bridging the racial wealth gap and addressing the affordable housing crisis in the US is in the nation’s best interest as it can bring stability to families, revitalize distressed communities, and have a positive impact on economic growth.
David Sand, Chief Impact Strategist at Community Capital Management, said: “Home ownership is one of the primary tools for building wealth and its benefits are far-reaching, from enhancing childhood development and school performance to increasing spending and employment in local communities to mental and physical well-being. Affordable housing for LMI, minority, and Black borrowers has been a primary focus for Community Capital Management for over two decades. We’re excited to partner with Impact Shares to offer a unique investment opportunity using the flexible, transparent ETF wrapper.”
Marvin Owens, Chief Engagement Officer at Impact Shares, added: “Decades of economic inequality and discriminatory homeownership policies have created a prominent racial wealth gap. The Black homeownership rate is approximately 45%, the lowest of all ethnic and racial groups in the nation. Providing affordable housing to minority Americans is a crucial step in helping to address the widening racial wealth gap and catalyzing economic growth in LMI communities.”
The fund’s launch coincides with the three-year anniversary of Impact Shares’ flagship ETF, the Impact Shares NAACP Minority Empowerment ETF (NACP US). Launched in July 2018 in partnership with the National Association for the Advancement of Colored People, NACP tracks the Morningstar Minority Empowerment Index, allocating capital to US companies with strong racial and ethnic diversity policies. NACP houses $30m in assets and comes with an expense ratio of 0.49%.