ETHO, the first broad based, diversified, socially responsible and fossil-free exchange-traded fund that does not have exposure to the energy sector on the New York Stock Exchange, was successfully launched today by investment management company Etho Capital in partnership with Factor Advisors, a subsidiary of ETF Managers Group.
The ETF is based on the Etho Climate Leadership Index (ECLI), an index that was announced in October and is completely divested of fossil fuel companies, rigorously screened for ESG criteria and composed of 400 of the most climate-efficient companies across sectors. The ETHO ETF offers investors a product with broad diversification while remaining socially and environmentally responsible. It is part of a series of financial products that will be released by Etho Capital, a company dedicated to taking sustainable investing mainstream.
The ETF is composed of U.S. public equities in the ECLI, which combines use of quantitative climate-emissions data and socially responsible investing expertise. According to Etho Capital, this allows diversified strategies that can optimize both sustainability and financial returns.
The launch of the ETHO ETF fills a critical void in the fossil-free investment sector. Our research shows that foundations, endowments and trustees are considering ESG metrics as part of their fiduciary duty more often when making investment decisions, and individuals are increasingly looking to align their investments with their values. The ETF will serve the explosive growth of the movement to divest portfolios from fossil fuels and invest in a clean energy future.
In September, it was announced that institutions and individuals representing more than $2.6 trillion in assets under management are committed to fossil fuel divestment. This number is likely to grow, as 84 percent of Millennials say they favor ESG investing, and roughly $41 trillion will pass to Millennials from baby boomers over the next 35 years. Further pointing to the the growing trend of socially responsible investing, $59 trillion has been committed to the U.N.’s Principles of Responsible Investing through more than 1,300 signatories.
Global leaders are preparing to address greenhouse gas reductions in Paris at COP21, and research shows investors are increasingly aware of the risks of portfolio exposure to fossil fuel companies. Two major, recent examples that emphasize these risks include President Obama’s rejection of the proposed Keystone XL pipeline and the New York attorney general’s new investigation of Exxon Mobil for potentially misleading the public about the impacts of climate change. Etho Capital controls these kinds of risks through its fossil-free investing products that focus on the most climate-efficient and socially responsible companies.
Paul Hawken, the renowned entrepreneur, author and founder of the climate solution organization Project Drawdown, said: “ETHO is a not just a new category of ETF, it is a discerning screen that in my opinion redefines what an ETF can do and impact. Like all great investments, it has a clear-eyed view of the future of money and people.”
Conor Platt, Co-Founder, Chief Executive Officer and Chief Investment Officer of Etho Capital, as well as the Founder of Confluence Capital, said: “Our research shows that investing in climate-efficient companies can yield higher returns. Investors want options that prioritize both profits and the planet, and ETHO is helping fill these needs. The ETHO ETF allows investors to put their money toward supporting the most sustainable, forward-looking companies in the world whose management teams are planning for our climate in a changing, competitive landscape.”
Ian Monroe, Co-Founder, President and Chief Sustainability Officer of Etho Capital, as well as the Founder of Oroeco and a Lecturer on climate change and life cycle assessment science at Stanford University, said: “Investors of all ages are increasingly concerned about climate change, but younger investors are especially focused on aligning their portfolios with their long-term sustainability because they have the most to lose from the ripple effects of a rapidly warming world. At Etho Capital, our goal is to empower everyone to invest in climate sustainability and social responsibility while gaining competitive financial returns. The ETHO ETF combines all these elements and makes them accessible to the full spectrum of investors, ranging from large institutions to college students investing for the first time.”
Sam Masucci, founder and CEO of ETF Managers Group, said: “Investment products that require only passive management are important features for many investors who do not have the time, money or desire to actively manage their portfolio. We are pleased to launch the ETHO ETF with Etho Capital, providing investors with the first-ever ETF that we believe fills this critical need as well as the need for investing options that are socially responsible.”
Lauren Smart, Executive Director of Trucost, said: “Trucost is honored to partner with Etho Capital on the launch of its ETHO ETF, an innovative, sustainable product available to all investors. Trucost is committed to promoting data-driven, scientific insights that expose risks and opportunities within investment portfolios. We look forward to deepening our relationship with Etho Capital and collaborating on their socially responsible investing initiatives in the future.”
Vanessa Green, Campaign Director of Divest-Invest Individual, said: “The ETHO ETF is a model of the principled, competitive investment vehicles that today’s investors demand in the face of climate threats and related market risk which can potentially accelerate capital shifts and challenge competitors to raise the bar, which is a priority if we want to avoid the worst impacts of climate change.”
1 This statement can be attributed to the Divest-Invest coalition’s announcement in September based on a report complied by the Arabella Advisors
2 Morgan Stanley released the Sustainable Signals report in February, 2015
3 As reported by the World Economic Forum’s 2014 Impact Investing: A Primer for Family Offices report in 2014
4 According to the U.N’s Principles of Responsible investing
6 Bloomberg, November 12, 2015, Climate Risk May Hit Portfolios Hard Now, Cambridge Study Finds
7 NY Times, November 6, 2015, Obama expected to reject construction of Keystone XL oil pipeline
8 NY Times November 5, 2015, Exxon Mobil under investigation in New York over climate statements
Trucost: James Richens, +44 (0)20 7160 9804, firstname.lastname@example.org
About Factor Advisors
Factor Advisors LLC is a wholly owned subsidiary of Exchange Traded Managers Group LLC (ETF Managers Group), a leading Exchange Traded Funds (ETF) private label services company. ETF Managers Group offers a full range of ETF product services to the asset management community including commodity pool ETPs as well as both active and passive ETF funds. The services provided include product operations, regulatory, financial and compliance management. ETF Managers Group offers active marketing and dedicated wholesale services for all ETF product types.
About Etho Capital
Etho Capital is a mission-driven investment management company committed to helping solve climate change by bringing sustainable investing mainstream. Etho’s mission is to build the world’s best fossil-free investment solutions by providing superior environmental, social and financial performance. Etho’s innovative and thoughtful approach combines quantitative sustainability science and stakeholder expertise with the diversified returns and risk management of index investing.
Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s summary and statutory prospectuses, which may be obtained by 1-844-ETF-MGRS (1-844-383-6477) or visiting www.tierrafunds.com www.ethoetf.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The fund is new with limited operating history. Investing involves risks, including loss of principal. The Fund will be sensitive to changes in, and its performance will depend to a greater extent on, the overall condition of the retail sector. Funds that invest in smaller companies may experience greater volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the ETHO ETF. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
It is not possible to directly invest in an index.
Factor Advisors, LLC serves as the investment adviser and Penserra Capital Management LLC serves as sub-advisor to the Fund. The Funds are distributed by ALPS Distributors, Inc., which is not affiliated with Factor Advisors, Penserra Capital or any of its affiliates.