By Michael Johnston:
AdvisorShares has made another addition to its lineup of actively-managed ETFs, recently debuting a fund that will focus on the concept of sustainable investing. The new Global Echo ETF (GIVE) will be structured as a core allocation that will seek out sustainable investment-themed opportunities across various asset classes, including fixed income, equities, and alternatives. The GIVE portfolio will include individual securities as well as other ETFs [see also 101 ETF Lessons Every Financial Advisor Should Learn].
Sustainable Investing 101
According to AdvisorShares, sustainable investment opportunities take environmental sustainability, social responsibility, and corporate governance factors (:ESG) into account when making allocation decisions. Sustainable investing methodologies have the potential to contribute to superior long-term investing returns if managers are able to identify securities that will benefit from positive ESG factors. In other words, it can be beneficial to own stocks that build strong community relationships, avoid costly lawsuits and investigations, and have strong corporate governance to prevent misuse of funds or other fraud.
GIVE will charge an all-in expense ratio of 1.70%. A portion of that total–0.40%–will be contributed to the Global Echo Foundation. That charity was co-founded by Philippe Cousteau, Jr., and works on a wide range of social issues including the support of social entrepreneurship and supporting the health and well-being of women and children in communities around the globe. Philippe is the grandson of legendary French explorer and author Jacques Cousteau [see also 25 Things Every Financial Advisor Should Know About Commodities].
When Global X debuted its Food ETF (EATX) in 2011 it announced that a portion of the management fees would be given to support Action Against Hunger, a humanitarian group that sought to end world hunger. EATX struggled to gather assets, and was shuttered in the first quarter of 2012.
There are already a handful of index-based ETFs designed to be consistent with concepts of socially responsible investing; those include the iShares KLD Select Social Index Fund (KLD), North America Sustainability Index ETF (NASI) and Pax MSCI EAFE ESG Index ETF (EAPS).
Under The Hood
According to the prospectus, GIVE could seek out opportunities that include a wide range of sustainable investment themes, including: economic themes (corporate governance, risk & crisis management, community investment, energy efficiency, food, green building); environmental themes (air, water, earth); technology themes (mobility, renewable energy, technology and access); and social themes (human health such as occupational health and safety) [see also 22 ETF Experts You Need to Follow on Twitter].
GIVE is somewhat unique in that the underlying portfolio will effectively consist of four sub-portfolios, each of which will be under the direction of a management team:
- First Affirmative Financial Network: Alternative Long/Short and Hedging Strategies
- Reynders, McVeigh Capital Management: Core equity strategies
- Baldwin Brothers: Core equity strategies
- Community Capital Management: Core fixed income
Disclosure: No positions at time of writing.