Even as flows into ESG ETFs are slowing, Emerge is introducing its first set of active sustainable ETFs with a twist – each fund will be overseen by women.
On Sept. 8, the investment management firm launched five different ESG exchange-traded funds, with versions listed on both the Cboe BZX Exchange in the US and the NEO Exchange in Canada. The funds invest in equity securities that exclude certain categories, according to prospectus documents, such as gambling, adult entertainment and chemical weapons.
When asked why Emerge was introducing these 10 funds while equity markets are limping and so-called anti-ESG funds are gaining traction, the firm’s CEO and founder Lisa Langley countered with, “Why not now?”
“We are taking a practical and real-world approach to sustainability,” Langley said in a phone interview.
“ESG and sustainability work requires expertise and dedicated resources,” she added. “I think all the attention given to this area recently, albeit some negative, is because it does require those resources and it is expensive.”
Emerge’s new funds will each have an expense ratio of 0.85%.
Toronto-based Emerge is Canada’s first and only women-owned investment fund firm, with assets under management of C$120m ($91m US) at Emerge Canada and $800m at Emerge Capital, its US arm.
Its five funds, built with Emerge’s proprietary ESG framework, will be listed in both the US and Canada. They are the Emerge EMPWR Sustainable Dividend Equity ETF (US ticker EMCA), Emerge EMPWR Sustainable Select Growth Equity ETF (EMGC), Emerge EMPWR Sustainable Global Core Equity ETF (EMZA), Emerge EMPWR Sustainable Emerging Markets Equity ETF (EMCH) and Emerge EMPWR Unified Sustainable Equity ETF (EMPW).
“Issuers are constantly looking for new ESG approaches. This seems to be taking it a step further, saying not only invest in names which promote gender equality, but also through an issuer with aligned values,” Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence, said of the EMPWR funds.
EMCA is sub-advised by Catherine Avery of Catherine Avery Investment Management. For EMGC, the sub-adviser is Cate Faddis of Grace Capital. EMZA will be sub-advised by Sonia Kowal and Jane Li of Zevin Asset Management, while EMCH will be overseen by Josephine Jimenez of Channing Global Advisors. EMPW will be managed by Langley.
“We’re super excited,” Langley said of the fund managers. “They’re just wicked smart and they work so hard.”
In addition to launching these new funds, Emerge will also debut EMPWR, a program to encourage more women to be investment managers, especially for funds that promote sustainability, diversity and equity.
Emerge already has other actively managed thematic ETFs, including a group of Canadian funds sub-advised by Cathie Wood’s Ark Investment Management, including the Emerge ARK Global Disruptive Innovation ETF (EARK), Emerge ARK AI & Big Data ETF (EAAI) and Emerge ARK Autonomous Tech & Robotics ETF (EAUT).