In Brief

Direxion preps farming tech, EV ETFs

Rafferty Asset Management will advise the products

Direxion is prepping two ETFs that would invest in companies involved in farming and electric vehicle technology.

The company filed prospectuses Aug. 23 for the Direxion Future of Farming ETF and Direxion Electric and Autonomous Vehicles ETF, which would go live as soon as 75 days afterward.

Both of the index-tracking products would be advised by Rafferty Asset Management, with portfolio managers Paul Brigandi and Tony Ng overseeing them, according to the filing made with the Securities and Exchange Commission.

The Future of Farming ETF would track the S&P Kensho Sustainable Staples Index, investing in US public companies “that enable connected agricultural producers to enhance output while reducing waste and resource exhaustion using state-of-the-art sustainable practices,” the filing states. That also includes securities listed in the S&P Kensho Drones Index, Robotics Index, 3D Printing Index, Genetic Engineering Index and Space Index, along with the Sustainable Farming Index.

The other product, the Direxion Electric and Autonomous Vehicles ETF, would track the Indxx US Electric and Autonomous Vehicles Index. That index includes companies with at least 50% of revenue related to electric or autonomous vehicle manufacturing, infrastructure, such as charging docks or software, and technology.

Calvert files for first ETFs

Morgan Stanley Investment Management will serve as adviser to the funds

Calvert has filed initial registration papers for its first ETFs — a line of products that lists Morgan Stanley Investment Management as the adviser.

The fund provider, which is part of the Morgan Stanley-owned firm Eaton Vance, filed with the Securities and Exchange Commission on Aug. 13 for four products. Those include the Calvert International Responsible Index, US Large-Cap Core Responsible Index, US Large-Cap Diversity, Equity and Inclusion Index and US Mid-Cap Core Responsible Index ETFs.

Each of those passively managed products would track a similarly named index built by Calvert, according to the filing. The ETFs could launch “as soon as practicable” after the effective date of the registration statement. Typically, subsequent prospectus filings known as 485APOS place a start date 75 days afterward.

The products appear to be the first ETFs provided by Calvert, Gabe Denis, the lead Morningstar analyst covering Morgan Stanley, said in an email statement.

“We are seeing many firms enter the ETF space, both to complement (or even replace) existing open-end funds and to launch completely new strategies. The reasons vary and can include wishing to provide a strategy in a potentially more tax-effective (and often cheaper, for investors) vehicle or to appeal to new investor bases and distribution channels,” Denis said. “It will take time to assess how investors react to these new ETFs and how they will sit alongside Calvert’s existing open-end mutual fund offerings.”

Vanguard preps global environmental fund

The active fund will be managed by Ninety One

Vanguard is preparing to launch an actively managed mutual fund that will invest primarily in “environmental companies,” according to a regulatory filing made last week.

The financial giant’s Vanguard Global Environmental Opportunities Stock Fund could go live as soon as November 2 and will be subadvised by Ninety One North America, a subsidiary of the similarly named UK-based firm.

The forthcoming fund will hold about 25 global companies in its portfolio, including those the adviser finds contribute “positively to environmental change.” That is determined by “mapping such company’s revenues to certain industry sub-sectors … aligned to the process of decarbonization,” the initial prospectus states. Those holdings can be related to renewable energy, electrification and resource efficiency, but are not limited to them.

The fund will come in Vanguard’s investor and admiral shares, which have total annual fees of 75 basis points and 60 bps, respectively.

Portfolio managers for the fund will be Ninety One’s Deirdre Cooper and Graeme Baker, according to the filing.

abrdn launches Americas sustainability institute

Team will develop sustainable investment products and offerings in the region

abrdn has launched the Sustainability Institute Americas, which will be led by Fionna Ross.

Modeled on the firm’s sustainability institute in Asia Pacific launched last year, it will develop sustainable investment products and offerings in the Americas. And according to abrdn, the institute will “leverage abrdn’s global perspective in influencing issues that affect the firm’s clients and engagement with invested companies.”

Ross, sustainability investment specialist and head of the sustainability institute, Americas, has been at the firm for 14 years. She has spent a number of those years developing abrdn’s ESG frameworks and approach to engagement for the Americas. Most recently Ross’ role was senior ESG analyst for abrdn’s US equities franchise.

Amanda Young, abrdn chief sustainability officer, investments said: “We are proud to bring our institute model to the Americas, and Fionna’s appointment is a testament to abrdn’s sustainability heritage.

“She has built years-long relationships and reputation among our colleagues, clients and external stakeholders. Her expertise and unique perspective of the US market make her a natural choice to lead this important launch.”

Ralph Bassett, head of investments, Americas added: The formation of the institute and appointment of Fionna signals our commitment to strive for best-in-class thought leadership as well as capabilities in the Americas to help our clients navigate an increasingly complex landscape with authenticity and transparency.”

SEC probes ESG funds on trading away voting rights

Enforcement lawyers have been asking ESG funds how they lend out their shares

The Securities and Exchange Commission has been grilling ESG fund providers to determine whether they are trading away their rights to vote on ESG issues, Bloomberg News reports.

Citing people familiar with the matter, the report said that, for the past few months, enforcement lawyers for the SEC have been asking questions of ESG funds about how they lend out their shares and whether they recall them before corporate elections. The practice lets asset managers earn fees that benefit investors, but it can also impact the ability to cast ballots.

The regulator wants to know whether asset managers are making proper disclosures to investors, Bloomberg reports. The issue is whether ESG funds can actually affect positive social change if the shares they lend out end up in the hands of short-sellers who may have an opposing view.

The SEC declined to comment on Bloomberg’s report.

Such a move would come as part of a wider crackdown by the US authorities on the ESG investment industry, which has seen the SEC plan new regulations on ESG product marketing, and sue companies over their ESG disclosures.

Thrivent preps semi-transparent ESG ETF

The small- and mid-cap product will not disclose holdings daily

Thrivent is preparing to launch an actively managed semi-transparent ETF composed of small- and mid-cap stocks.

The Minneapolis-based firm on August 4 filed a prospectus for the Thrivent Small-Mid Cap ESG ETF. That follows the firm’s registration of the ETF trust late last year.

The product, which is actively managed, uses a “semi-transparent” structure allowed under exemptive relief from the Securities and Exchange Commission. The ETF does not disclose its holdings daily but instead provides a “proxy portfolio” to help keep shares trading at net asset value and given investors a rough idea of the holdings. By keeping the exact portfolio under wraps, the firm would not give away its strategy to would-be competitors.

The fund will invest at least 80% of its net assets in companies that Thrivent “believes have sustainable long-term business models and demonstrated commitment to ESG policies, practices or outcomes,” the prospectus states.

The ETF has total net fees of 65 basis points and will be overseen by Thrivent Asset Management portfolio managers Matthew Finn and Charles Miller, who have been with the company since 2004 and 2013, respectively.