Schwab to Launch First ESG, Active ETF ThinkAdvisorSchwab to Launch First ESG, Active ETF ThinkAdvisorSchwab to Launch First ESG, Active ETF ThinkAdvisor
Impact Investing Forum 2023
London. May 04-05, 2023.
What you need to know
The Schwab Ariel ESG ETF, which is semi-transparent, invests in small- and mid-cap stocks that have been screened for ESG factors.
The Schwab ESG fund is not only the first, but also the first actively managed ETF.
Ariel Investments, subadvisor to the fund, will select holdings based upon ESG factors and negative screen.
Schwab Asset Management will launch its first fund that focuses on environmental, social, and governance factors. This joins a growing number of asset managers that sponsor ESG mutual funds or exchange traded funds. Schwab’s first actively managed ETF will also be the ESG ETF.
The Schwab ESG ETF (SAEF), which is semi-transparent, invests in small and mid-cap stocks that have been screened for ESG factors. Ariel Investments, the subadvisor, is responsible for managing the portfolio daily.
According to the Schwab press release, the ETF will begin trading “on or around Nov. 16” on the New York Stock Exchange. It has an operating expense ratio (0.59%).
The Schwab Ariel ESG ETF will utilize the NYSE’s proxy structure. This allows the fund limit the daily disclosures of its actual holdings and prevents any front-running. Instead, a proxy portfolio that closely tracks the actual portfolio will be published each day.
Malik Sievers from Schwab Asset Management, head of ESG Strategy, stated that “our first proprietary ESG fund addresses an obvious gap in the market to fund a small-to-mid-cap ESG fund managed using a value investing lens.”