Latest Launches

Touchstone files for ‘climate transition’ ETF

Managed by Lombard Odier's Paul Udall

Touchstone Investments is preparing its fifth ETF, a product that would seek to invest in companies benefitting from “a transitioning climate environment”.

The company filed an initial prospectus January 5 for the Touchstone Climate Transition ETF. The fund would seek out equity securities that the fund’s subadvisor, Lombard Odier Asset Management, sees as “leading the development of solutions for a net-zero carbon emissions and climate-resilient economy, and/or may benefit from a transition to a carbon-constrained world and adaptation to a carbon-damaged world”. That includes companies seen as solutions providers, transition leaders and those providing “adaptation opportunities”, according to the filing.

Lombard Odier’s Paul Udall is listed as portfolio manager for the forthcoming ETF, while Peter Burke-Smith would be assistant portfolio manager.

Listen to ESG Clarity EU’s podcast with Paul Udall here.

Touchstone has several existing ETFs, none of which appear to have a climate-related or ESG focus. However, two of the firm’s mutual funds do – the Non-US ESG Equity Fund and the International ESG Equity Fund.

The forthcoming ETF is actively managed and would be listed on the Chicago Board Options Exchange. It has net expenses of 69 basis points.

Engine No. 1 preps scarcity-themed ETF

The actively managed ETF would hold companies focused on addressing resource scarcity

The small asset management firm that less than two years ago won board seats at Exxon Mobil is planning to launch its third ETF.

Last Friday, Engine No. 1 filed an initial prospectus for its Transform Scarcity ETF. That product, which could commence trading in less than three months, would invest in 20 to 60 small to large companies that are addressing current and future resource scarcity, according to the filing. That includes companies that “are transforming their own or others’ use of scarce resources within their products, services or business operations, relying on more sustainable alternatives … innovating renewable technologies or creating more efficient processes that recycle, reuse or regenerate,” the firm stated in the prospectus.

The categories of scare resources include food and agriculture; water; land; and people, with the latter ranging from education and skills training to reproductive services.

The actively managed ETF would be overseen by Engine No. 1 Director of ETF Portfolio Management Molly Landes, active ETF group leader Eli Horton and founder Christopher James.

Engine No. 1 currently has two ETFs: the passively managed $366m Transform 500 ETF; and the actively managed $89m Transform Climate ETF.

A public relations group that works for firm said in an email that it would not comment about the forthcoming ETF.

Engine No. 1 made headlines in 2021 following a historic proxy vote at Exxon Mobil, with three of the asset manager’s nominees winning seats on the company’s board. The firm had engaged with Exxon over transitioning to a lower-carbon business, its long-term capital allocation discipline and other issues.

New ETF bets on companies led by women

Hypatia Women CEO ETF leverages the logic that female executives represent a rare level of excellence

Asset manager Hypatia Capital is hoping to ride a wave of research pointing to the strength of companies with women in top leadership positions.

The Hypatia Women CEO ETF (WCEO), which debuts Monday, is an actively managed strategy that aims to capture performance alpha by investing in companies with female executives and significant female representation on boards of directors.

The ETF is expected to generally follow the Hypatia Women CEO Index, which tracks female-led companies with market capitalizations of at least $500m.

Part of the case being made for investing in companies led by women reflects the premise that it’s more difficult for women to reach the top executive ranks and therefore female leaders are more likely to possess exceptional leadership and management skills.

“Women who are able to make it into CEO roles have to be much better than their male counterparts,” said Deborah Fuhr, founder of research firm ETFGI.

“The thesis behind it seems to be supported by more and more research,” Fuhr said. “This product plays into a theme of looking at the way ESG and diversity and equity is growing in importance. I think many retail investors will understand this.”

2022 study by McKinsey & Co. showed that while some progress is being made, women are still underrepresented in the ranks of top management.

According to the report, women occupy 26% of C-suite positions, which is up from 20% in 2017. The issue is that white men still fill 61% of C-suite level positions.

The report cited a “broken rung” in the ladder toward senior leadership.

“For every 100 men promoted from entry level to manager, only 87 women are promoted, and only 82 women of color are promoted,” the report states. “As a result, men significantly outnumber women at the manager level, and women can never catch up. There are simply too few women to promote into senior leadership positions.”

The WCEO fund is far from the first attempt to the tap into the skills and expertise of women.

“This new ETF follows in the footsteps of the SPDR MSCI Gender Diversity ETF (SHE) that has faced some challenges to gathering assets,” said Todd Rosenbluth, head of research at VettaFi.

“While demand for ESG ETFs slowed in 2022, some investors have strong conviction in the importance of female leadership,” Rosenbluth added

Launched in 2016, SHE has grown to just $207m. The ETF is up 2% so far this year but lost almost 22% last year.

That compares to the S&P 500 Index, which is up 1.5% this year and lost 18% last year.

The Impact Shares YWCA Women’s Empowerment ETF (WOMN) is another example of a strategy tapping into the same general theme without much success so far. Launched in 2018, WOMN has grown to just $33m. The fund is up 2.3% this year after declining by 18% last year.

This article first appeared in InvestmentNews.

Global X files for carbon credit futures ETF

The product would be one of several in a growing field

Global X is coming to the market with a carbon credit futures ETF, adding to roughly half a dozen US products in that category.

The Mirae company filed a prospectus December 28 2022 for the Global X Carbon Credits Strategy ETF, which would track the ICE Global Carbon Futures Index.

The ETF would invest at least 80% of its net assets, along with borrowings, in long positions of securities in the index or ones that are similar to those in the index, according to the prospectus. The index includes carbon credit futures within cap and trade systems, such as those in the UK and California.

Currently there are at least six US-domiciled ETFs that invest in the carbon credits market, according to data from ETF.com.

Portfolio managers on the forthcoming Global X ETF are Nam To, Wayne Xie, Kimberly Chan, Vanessa Yang and Sandy Lu. Fee information was not included in the prospectus filed with the Securities and Exchange Commission.

DWS readies ‘climate action’ ETF

The product would be the 14th Xtrackers ETF with an ESG theme

DWS is preparing an Xtrackers ETF that would invest in companies seen as leaders in addressing climate change in their businesses.

Late last week the company filed a prospectus for the Xtrackers MSCI USA Climate Action Equity ETF, which would focus on large- and mid-cap companies. The index targets 50% coverage of companies from each sector in MSCI’s USA Index. It currently includes 313 securities, according to the filing with the Securities and Exchange Commission.

The prospectus filed December 29 2022 would be effective as of March 15. The forthcoming fund would be Xtrackers’ 14th ESG-themed ETF.

Portfolio managers are DBX Advisors vice presidents Bryan Richards, Patrick Dwyer, Shlomo Bassous and Ashif Shaikh. The prospectus did not yet include fee information.

TrueMark adds ETF for renewable energy

The fund is subadvised by Eagle Global Advisors

Asset manager TrueMark Investments recently added an ETF focused on renewable energy.

The TrueShares Eagle Global Renewable Energy Income ETF launched Dec. 8. The actively managed fund seeks to invest in stocks of companies involved in renewable energy, including solar, wind, biofuels, hydropower, nuclear or geothermal power, according to the prospectus.

The subadvisor, Eagle Global Advisors, uses “a fundamentally-driven investment process which includes the analysis of global macro-economic and geo-political factors, fundamental company analysis, internal valuation methods and the projected rate of return from the investment given its expected level of risk.”

The ETF, which trades on the New York Stock Exchange, has net fees of 75 basis points.

Portfolio managers are Eagle Global Advisors’ Michael Cerasoli, Alex Meier and Steven Russo.

The recently passed Inflation Reduction Act, which includes billions of dollars for clean energy investments, bodes well for the ETF, Cerasoli said in an announcement for its launch.

“Above and beyond the environmental characteristics, the next generation of renewable infrastructure companies are laying the groundwork necessary to restructure power grids and commercialize the utility of solar, wind, hydro and biomass alternatives that have more runway and tailwinds than ever before,” he said.