Earlier today, Portsmouth, New Hampshire-based Pax World announced the launch of ESG Shares, the first group of ETFs focused exclusively on sustainable investing. The name “ESG” stands for environmental, social, and governance, which are the three main factors that the line of funds will focus on when determining investment choices. Pax World has been at the forefront of sustainable investing ideas for decades; the company launched the first socially responsible mutual fund in 1971 and currently offers a number of sustainable investing mutual funds for a variety of asset classes and investment strategies.
The three ETFs to be launched include:
- ESG Shares North America Sustainability Index ETF (NASI): This ETF launched today, and seeks to track the performance of the FTSE KLD North America Sustainability Index, a broadly diversified, sector-neutral index of American and Canadian companies with superior ESG performance as rated by KLD Research & Analytics, Inc.
- ESG Shares FTSE Environmental Technologies (ET50) Index ETF (ETFY): This ETF is scheduled for launch later this week. ETFY will track the performance of the FTSE ET50 Index, comprised of the 50 largest ‘pure-play’ environmental companies globally by full market capitalization. The companies in the index have a primary business focus in the areas of alternative energy and energy efficiency, water technologies and pollution control and waste technologies and resource management.
- ESG Shares Europe Asia Pacific Sustainability Index ETF (EAPS): This ETF is scheduled for launch next week. EAPS will track the performance of the FTSE KLD Europe Asia Pacific Sustainability Index, a broadly diversified, sector-neutral index of companies in Europe and Asia-Pacific with superior ESG performance as rated by KLD Research & Analytics, Inc.
“We are very excited to be offering the first family of ETFs focused exclusively on sustainability indexes constructed by our partners, KLD Indexes and FTSE,” said Pax World President and CEO Joe Keefe. “Now there are ETF solutions for investors who seek to capture the potential returns associated with superior ESG or sustainability performance.”
Stiff Competition
These ETFs join a few existing ETFs focusing on socially responsible investing. NASI and EAPS look to compete with the iShares KLD Select Social Index Fund (KLD) and iShares KLD 400 Social Index Fund (DSI), both of which target companies that have positive environmental, social, and governance characteristics. In aggregate, these two iShares ETFs have amassed more than $230 million in assets under management. Meanwhile ETFY could compete with the PowerShares Cleantech Portfolio (PZD) which tracks the Cleantech Index and the Market Vectors Environmental Index ETF (EVX). These two ETFs have amassed just over $160 million in assets under management (for more on clean energy investing see this Definitive Guide To Clean Energy ETFs).
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Disclosure: No positions at time of writing.
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