Schwab launches its first ESG ETF. Firm’s head of strategy on what sets it apart from the pack cnbc.comSchwab launches its first ESG ETF. Firm’s head of strategy on what sets it apart from the pack cnbc.comSchwab launches its first ESG ETF. Firm’s head of strategy on what sets it apart from the pack cnbc.com
Impact Investing Forum 2023
London. May 04-05, 2023.
David Botset, the head of strategy and product at Charles Schwab, says there is one thing that makes Charles Schwab’s venture into governance, environmental, and social investing stand out. Botset said Monday that many ESG offerings today are focused on large-cap companies and have a bias towards growth-oriented businesses. “What we’ve created here with Ariel, and the investment philosophy, provides investors small- and mid-cap exposure with some value tilt to help really build a well-rounded ESG Portfolio,” he stated. The Schwab Ariel ESG ETF(SAEF), which was launched on the New York Stock Exchange a week ago, is the first ESG ETF of the firm and the first actively managed ETF. It has a semi-transparent structure, which means it is not obligated to disclose its holdings on a daily basis.Schwab’s longtime affiliate-turned-product-partner Ariel, a nearly $20 billion asset manager and one of the world’s oldest minority-owned investment firms, rates the ETF’s potential holdings according to its proprietary ESG research.It also screens negatively for companies deriving revenue mainly “from the production or sale of tobacco products, the exploration for or the extraction of fossil fuels, the operation of private prisons or jails, and the manufacture of firearms, personal weapons, small arms, or controversial military weapons,” according to a press release. Botset stated that small and mid-cap ESG strategy are hard to find, so it serves a strong point in investors portfolios along with many of the traditional large-cap, growth-oriented ESG Strategies that are available today. ETF Trends CEO Tom Lydon said that the availability of more options in ESG space should be beneficial for individual investors. He said that there are many options and that index providers and management companies look at it in many different ways. This is good news for average investors. “You can see the unique approach that Ariel brings to the table and the fact they have been doing this for decades. Many companies can’t say the exact same. Lydon stated that it is always a good idea to be cautious. The CEO stated that it takes more research on the part of the average investor and advisor because clients expect — not just to request, but to receive — an ESG overlay. This could come in many different shapes, sizes, and colors. “That’s going be really important going ahead.”