Thrivent Asset Management has launched an ESG-focused exchange traded fund focused on small- and mid-cap stocks. The Thrivent Small-Mid Cap ESG ETF (NYSE Arca: TSME) will maintain a portfolio of small- and mid-cap stocks across the growth and value spectrums that meet certain criteria for environmental, social, and governance practices. The fund will be actively managed.
Lead portfolio manager Matt Finn and associate portfolio manager Chad Miller limit the portfolio to a select mix of about 40 to 60 promising small- and medium-sized companies with attractive valuations that have demonstrated a commitment to ESG initiatives and furthering sustainable business practices. TSME’s management team evaluates prospective holdings under the lens of the third-party ESG materiality framework from the Sustainability Accounting Standards Board. The fund also screens out all companies that receive a CCC rating, which is the lowest category in the MSCI ESG rankings.
“The fund combines Thrivent’s expertise in the small and mid-cap actively managed space with a proprietary environmental, social and governance analysis process,” said Miller. “Then we combine that with our bottom-up fundamental research process, complemented by engagement, to provide what we believe represents a unique offering in the marketplace.”
Rather than focus on any one single issue, TSME takes a holistic approach to ESG investment management, focusing on how companies are performing across the broader ESG bucket, as well as the individual issues that fall under each of these categories. On environmental issues, for example, TSME focuses on how companies are impacting the natural environment and their strategies to reduce this impact over time.
“We’re looking for companies that can create emissions as efficiently as possible in the short- to medium-term, and then ultimately reduce those over the long term,” Miller added. “We’re looking for companies that have a strategy to solve water scarcity challenges, consider biodiversity impacts, and then also invest in circular business models that create great efficiencies for the environment, as well as the individual companies.”
TSME has an expense ratio of 0.65%.
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