State Street Global Advisors made a splash in the ESG ETF space on Tuesday, debuting the SPDR® S&P 500 ESG ETF (EFIV) that’s designed to give investors an opportunity to tap into ESG investing at the core of their portfolio with an expense ratio of just 10 basis points. It’s listed on the New York Stock Exchange.
EFIV enhances both SPDR’s ESG and S&P 500 ETF offerings, seeking to help investors incorporate ESG while achieving a risk and return profile comparable to the S&P 500.
Sue Thompson, Head of SPDR Americas Distribution at State Street Global Advisors, said ESG investing is approaching a critical inflection point.
“The collective call for change is growing louder and investors are increasingly taking a stand through their investment choices,” Thompson said. “EFIV meets the growing demand for cost-effective solutions that help put ESG investing into action by offering investors an ETF that seeks to track a more sustainable version of one of the most renowned benchmarks in the world.”
She added as ESG factor-based strategies pivot from check the box components to must-have ingredients in every portfolio, State Street remains committed to providing a broader range of ESG solutions.
“This is really emblematic of the ESG flows and interest we’ve seen all year,” said Dave Nadig, ETF Trends’ Director of Research. “From the largest institution to the most retail investor, 2020 has been the breakout year for this category. This latest salvo from State Street Global Advisors gives investors a unique, yet familiar way to bridge into ESG investing.”
EFIV seeks to track the S&P 500 ESG Index (the “Index”), which is designed to measure the performance of securities meeting certain sustainability criteria (i.e., criteria related to environmental, social and governance factors), while maintaining a similar overall industry group weight as the S&P 500 Index.
Dan Draper, Chief Executive Officer at S&P DJI, said the S&P Dow Jones Indices (S&P DJI) has a longstanding relationship with State Street’s SPDR business that dates back more than 27 years.
“We’re excited to expand this ongoing collaboration today,” Draper said. “We’re delighted that State Street has licensed the S&P 500 ESG Index for its new fund, incorporating ESG factors into the core S&P 500 benchmark, which is widely regarded as the best single gauge of large-cap U.S. equities.”
With over $11 trillion indexed or benchmarked to the S&P 500, the index is one of the most closely followed equity barometers in the world. Comprised of 500 companies in leading industries and covering approximately 80% of available market capitalization in the U.S., the S&P 500 is the benchmark of choice for countless investors seeking broad, diversified exposure to large-cap U.S. equities.
All constituents of the S&P 500 are eligible for inclusion in the Index, except for companies that:
- Are involved with tobacco-related products and services, based on certain levels of production, revenue or ownership;
- Are involved in controversial weapons, including cluster weapons, landmines, biological or chemical weapons, depleted uranium weapons, white phosphorus weapons, or nuclear weapons, or hold certain ownership stakes in a company involved in these activities;
- Have a United Nations Global Compact (“UNGC”) score in the bottom 5% of all UNGC-scored companies globally;
- Have an S&P DJI ESG Score that falls within the worst 25% from each Global Industry Classification Standard (GICS) industry group;
- Do not have (i) coverage for tobacco- and controversial weapons-related involvement from the Index’s third-party data providers for such information; (ii) a UNGC score determined by Arabesque; or (iii) an S&P DJI ESG Score.
State Street Global Advisors remains committed to helping the world’s governments, institutions and financial advisors reach their ESG investing goals. SSGA notes that they began managing its first ESG portfolio more than 35 years ago and today manage $286 billion in ESG assets on behalf of its global clients.
For more information on the SPDR ETF suite, visit www.spdrs.com.