Specialist thematic issuer Rize ETF has unveiled two new equity funds, focused on sustainable food and educational technology investment strategies.
London-based Rize ETF has launched two new ETFs providing exposure to sustainable food and edtech investment themes.
The Rize Sustainable Future of Food UCITS ETF and Rize Education Tech and Digital Learning UCITS ETF have listed on the London Stock Exchange, Xetra, and Borsa Italiana.
As with the issuer’s maiden fund launches, the new ETFs track indices that are administered by Foxberry and that have been designed in collaboration with perceived subject-matter experts.
Rize’s debut funds were the Rize Cybersecurity and Data Privacy UCITS ETF (CYBR LN) and Rize Medical Cannabis and Life Sciences UCITS ETF (FLWR LN), targetting the cybersecurity and medical cannabis themes respectively.
Sustainable food
The Rize Sustainable Future of Food UCITS ETF (FOOD LN, FOGB LN, RIZF GY and FOOD IM) tracks the Foxberry Tematica Research Sustainable Future of Food Index which uses insights from Virginia-based Tematica Research to screen for innovative firms across the food value chain that are adjudged to be working to build a more sustainable, secure, and fair food system.
The methodology includes companies that derive at least 50% of their operating profit (or revenue if data on operating profit is unavailable) from applicable food-related subthemes. Applicable subthemes include plant-based and organic foods, natural ingredients and flavours, food safety and testing, precision farming, agricultural science, land-based aquaculture, water management technologies, supply chain technology, and sustainable packaging.
The index employs a “purity-based” weighting scheme, where companies with greater exposure to the theme are assigned a larger weight, and currently consists of 44 stocks across developed and emerging markets. The United States represents the largest country weight, with 49.7%, followed by Germany with 6.2%, Switzerland with 6.0%, the UK with 5.4%, and Taiwan with 5.2%. Beyond Meat is the top holding, contributing 3.9%. Index reconstitution and rebalancing occur on a semi-annual basis.
According to Rize, the fund provides exposure to companies that are well-placed to benefit from the challenge of providing healthy, affordable, and nutritious food to a growing global population. It also fits within a socially responsible portfolio by investing in firms that are ultimately helping to reduce environmental harm by developing a sustainable food supply chain.
Stuart Forbes, co-founder of Rize, commented, “The security and sustainability of our food system is one of the world’s most pressing challenges. The good news is that the food industry has begun to respond. We see expanding plant-based protein options, new technologies penetrating farming, aquaculture, and supply-chains, and changes in the packaging used to wrap our food, among many other things.
“On the consumption side, we are witnessing a groundswell in consumer consciousness around what they’re putting inside their bodies and how that impacts the planet’s natural ecosystems. As the food system revolutionizes, we wanted to build an ETF that could capture the tailwinds arising from the wide array of supply side and demand side catalysts in the food sector.”
Chris Versace, CIO of Tematica Research, added, “For us, while the thematic universe in sustainable food was vast, using our thematic lens, we distilled the universe down into nine different subsectors that we believed captured the opportunity in the most compelling and powerful way. We then broke these subsectors down further into the companies that we were able to ascertain best embodied the theme.”
The ETF comes with an expense ratio of 0.45%.
Digital education
The Rize Education Tech and Digital Learning UCITS ETF (LERN LN, LERG LN, LERN GY and LERN IM) tracks the Foxberry HolonIQ Education Tech & Digital Learning Index which leverages insights from Sydney-based education intelligence firm HolonIQ to screen for firms deriving more than 30% of their operating profit (or revenue) from the development of online learning technologies.
The methodology encompasses companies providing learning technologies for each major age group including childhood, higher, and professional education. This includes firms offering personalized and adaptive learning, e-classrooms, Open Educational Resources (OERs), video and gamification, virtual and augmented reality, interactive modules, and immersion technologies.
Eligible stocks must also pass through a socially responsible investment screen with those deemed to have poor ESG profiles being removed from the selection pool.
Index constituents are weighted by average daily trading volume subject to an 8.5% cap and 0.25% floor, with reconstitution and rebalancing occurring semi-annually. The index currently comprises 35 stocks, across both developed and emerging markets. The United States represents the largest country weight, with 52.8%, followed by China with 35.9%, Japan with 3.8%, Brazil with 2.7%, and Australia with 2.3%. 2U is the top holding, contributing 9.3%. The index is relatively concentrated with the top five holdings constituting 43.7%.
According to Rize, the ETF provides exposure to a sector that is poised for high growth, with data from HolonIQ indicating educational technology expenditure is expected to reach over $400 billion by 2025, representing a 16.3% compound annual growth rate over the next five years.
Rahul Bhushan, co-founder of Rize, said, “Technology has the potential to tackle major challenges faced by the education sector. From promoting accessibility and inclusion, to empowering institutions and teachers, to supporting excellent student learning and outcomes, digital learning technologies can help elevate the education sector into the twenty-first century.”
Patrick Brothers, co-CEO at HolonIQ, added, “The surge in education technology spending brought on by Covid-19 is expected to recalibrate to a longer-term integration of digital technologies and transition to much higher adoption of online education over the coming years.
“Part of this transition includes significant ‘infrastructure catch-up’ required for managing learning, data, and administration as most schools and colleges are still at the very start of a long digital maturity journey. In addition to education technology’s primary role supporting the formal education sector, business-to-consumer education technology models are now on the rise as students, parents, and workers increasingly seek learning support and upskilling for supplemental or more direct academic and career outcomes.”
The ETF is also priced at 0.45%.
The funds are fully physically replicating and have each been seeded with $1 million.