Schwab Launches SAEF, the Schwab Ariel ESG ETF ETFdb.comSchwab Launches SAEF, the Schwab Ariel ESG ETF ETFdb.comSchwab Launches SAEF, the Schwab Ariel ESG ETF ETFdb.com
Impact Investing Forum 2023
London. May 04-05, 2023.
Schwab Asset Management, The Charles Schwab Corporation’s asset management arm, announced today the launch of the Schwab Ariel ESG ETF. (SAEF) An active, semi-transparent, also known as non-transparent, ETF that invests only in small- and medium-cap stocks that have been carefully screened on the basis of environmental, governance, and governance (ESG). Today will be the first day that trading begins.
Ariel Investments, LLC (“Ariel”) will sub-advise the new ETF. Ariel, the first African American-owned investment company in the United States, has nearly 40 years of experience integrating ESG elements into all phases of its investment process.
“Schwab is focused upon empowering clients, so we know that investing in accord with one’s values and principles is increasingly important for many investors,” Rick Wurster, president, The Charles Schwab Corporation. “We are thrilled to announce the Schwab Ariel ESG ETF with Ariel. We believe that our ETF and ESG capabilities together can help investors reach their financial goals.
Investors will have access to Ariel’s ESG investment process through the Schwab Ariel ESG ETF. The fund aims to provide long-term capital appreciation through Ariel’s value-based investing process. It focuses on small- and medium-cap U.S. businesses with favorable ESG characteristics, as measured by Ariel’s ESG risk rating process.
The Schwab Ariel ESG ETF could be used as a core or complementary equity ESG allocation in a portfolio. The operating expense ratio (OER), for the fund is 59 bps.
John W. Rogers Jr., founder, chairman and co-CEO of Ariel Investments, stated, “We are thrilled to extend our long-standing relationship avec Schwab and bring the value-based, high conviction ESG Approach to the Market in this new ETF.” Since 1983, Ariel Investments has been influenced by ESG. We believe in a more thoughtful and rigorous approach to ESG investing. This involves using proprietary analysis to gain a nuanced view on ESG risk, rather than relying on third-party rating system. We are long-term investors and we believe in dialogue, not dictating. We engage regularly with portfolio company management teams to address ESG concerns that are important to their financial health.
The Schwab Ariel ESG ETF provides active management in a semitransparent ETF. The new ETF is different from other ESG strategies that tend to favor growth and large-cap securities due to Ariel’s focus upon value and small- and medium-cap equity securities. Ariel will use its ESG research to determine a unique ESG-risk rating of each holding or potential holding in the fund.
Ariel will also use a negative screening process for the fund’s security selection. This seeks to exclude companies whose primary source revenue is derived either from tobacco products, exploration for or extraction of fossil fuels, operation of private prisons or prisons, and the manufacturing of firearms, small arms, or controversially military weapons.
Malik Sievers from Schwab Asset Management, head of ESG strategy, said, “At Schwab we deliver investment options, resources, and education.” “Our first ESG fund is a proprietary fund that addresses a market need for an ESG fund with small- to medium-cap size, managed with a value investing lens. We are excited to offer investors a new way to incorporate ESG into their portfolios. This may allow them to tailor their exposure to ESG investing according to their preferences and goals.
Schwab Asset Management is the fifth largest provider of ETFs. With more than a decade of ETF management experience, Schwab Asset Management also has a strong capital markets team that plays an important role in ensuring that Schwab ETFs work efficiently. Schwab’s holistic approach towards ESG includes education resources and access to third-party ESG product, as well as this new proprietary offering. Ariel offers a unique, bottom-up, actively managed investment approach that is designed to deliver long-term returns for investors. It recognizes ESG issues are important to business outcomes and views management as partners in strengthening ESG performance. The Schwab Ariel ESG ETF will be managed by Kenneth Kuhrt and John W. Rogers Jr., who are supported in their work by Ariel’s dedicated ESG team.
Schwab and Ariel Investments have a long-standing relationship and have collaborated for over 20 years on the “Ariel-Schwab Black Investor Survey”:https://www.aboutschwab.com/ariel-schwab-black-investor-survey-2021, a body of research that explores the similarities and differences between Black and white Americans when it comes to saving, investing, and other financial priorities.
You can find more information in the prospectus.
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