Investment Product and Service Launches

Art by Jackson Epstein

DWS Group Launches Equity ETF With Finland Insurance Company

DWS Group has created the Xtrackers MSCI USA ESG Leaders Equity exchange-traded fund (ETF). Developed in collaboration with Ilmarinen, Finland’s largest pension insurance company, the fund provides exposure to large- and medium-cap U.S. companies with environmental, social and governance (ESG) performance relative to their sector peers. The expense ratio for the new fund is 0.10%.

“Sustainability and ESG considerations are an integral aspect of our investment strategy and overall company philosophy and have been so for almost two decades,” says Anna Hyrske, head of Responsible Investments at Ilmarinen. “We welcome new ETF products that incorporate ESG factors in a pragmatic and efficient way. Taking material and relevant ESG data into account helps us achieve our goal of investing pension assets so that the return also secures the pensions of the future generations.”

The new fund is an expansion of the Xtrackers suite of ESG ETFs, which also includes the Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (NYSE Arca: ACSG), the Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (NYSE Arca: EMSG) and the Xtrackers MSCI EAFE ESG Leaders Equity ETF.

“Our aim is to be the partner of choice for our clients and to develop and provide solutions that allow them to fulfill their financial objectives in a way that is aligned with their core values,” says Fiona Bassett, global co-head of Passive Asset Management and global co-head of Product, DWS Group. “Our focus on our clients is paramount and we are delighted to collaborate with Ilmarinen to develop and bring USSG to the market. This latest expansion in our ESG offering will provide investors the opportunity to get exposure to the U.S. market while ensuring they invest in companies with the highest ESG performance and to do so at a highly competitive price point.”

USSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI USA ESG Leaders Index.

Vanguard Presents Active Equity ESG Fund Managed by Wellington

Vanguard has added to its current environmental, social, and governance (ESG) fund offerings with Vanguard Global ESG Select Stock Fund. The new active equity fund will be managed by Wellington Management Company LLP and is expected to be available for investment in mid-2019.

“Vanguard’s new Global ESG Select Stock Fund is taking a distinctive approach to ESG investing, seeking long-term outperformance through the selection of companies that integrate leading ESG practices into their corporate strategies,” says Matthew Brancato, head of Vanguard’s Portfolio Review Group.

The Global ESG Select Stock Fund will take a markedly different investment approach by employing an active portfolio integration strategy. Wellington Management will seek to outperform the FTSE All-World Index, a global benchmark that covers a majority of developed and emerging markets. In pursuit of this objective, Wellington Management will identify and select approximately 40 companies that they believe demonstrate exemplary long-standing ESG practices and have strong business fundamentals and management teams with proven track records of good capital allocation decisions for shareholders. The fund is expected to hold stocks over an extended time horizon, resulting in low portfolio turnover.

In addition to investment advisory responsibilities, Wellington Management will be responsible for governance activities for the fund. This will enable the fund managers to fully integrate proxy voting and company engagements into the fund’s investment strategy.  

The portfolio managers for Vanguard Global ESG Select Stock Fund will be Mark Mande as Wellington’s vice chair, senior managing director, partner, and equity portfolio manager; and Yolanda C. Courtine as Wellington’s senior managing director, partner, and equity portfolio manager.

The Global ESG Select Stock Fund is expected to be among the lowest-cost in the active ESG fund category with expense ratios of 0.45% and 0.55% for Admiral and Investor shares, respectively. The fund is designed for investors with balanced, diversified portfolios who wish to invest in companies with ESG practices, as identified by Wellington Management. At times, the fund may hold companies that would be omitted by some exclusionary ESG strategies, so this strategy may not be ideal for investors seeking to avoid investing in particular sectors or companies involved in activities that are at odds with their individual values. 

Goldman Sachs Announces ETF Suite Focused on Innovation

Goldman Sachs Asset Management (GSAM) has presented a suite of five exchange-traded funds (ETFs) seeking to track indices created by Motif, a provider of systematic, data-driven indices and strategies.

 “Technology is impacting every aspect of our daily lives,” says Mike Crinieri, GSAM’s global head of ETF Strategy. “It has grown from a single sector to a key driver of every sector. We are delighted to offer investors the ability to invest in companies driving these transformational changes.”

The following Goldman Sachs Motif ETFs are available to investors on NYSE Arca today at 50 basis points: GDAT: Goldman Sachs Motif Data-Driven World ETF; GFIN: Goldman Sachs Motif Finance Reimagined ETF; GDNA: Goldman Sachs Motif Human Evolution ETF; GMAN: Goldman Sachs Motif Manufacturing Revolution ETF; and GBUY: Goldman Sachs Motif New Age Consumer ETF.

To construct each index, Motif employs a rules-based methodology to analyze both traditional and alternative data in order to calculate a company’s ‘thematic beta’ and quantify its exposure to a specific transformational change. Proprietary technology is used to select and weight securities in the index, based on their relevance and investability.

State Street Enhances Fixed Income ETFs

State Street Global Advisors, the asset management business of State Street Corporation, announced several enhancements to two high-yield bond exchange-traded funds (ETFs).

A 1:3 reverse share split will be implemented to reduce trading costs for the SPDR Bloomberg Barclays High Yield Bond ETF (JNK). In addition, the SPDR ICE BofAML Crossover Corporate Bond ETF (CJNK) will change its index strategy and name, and decrease its expense ratio by 25 basis points to provide investors with low cost, broad high-yield exposure.

The 1:3 reverse share split for the SPDR Bloomberg Barclays High Yield Bond ETF raises its share price to approximately $105, helping to reduce trading costs for clients seeking liquid exposure to high-yield bonds. The shares will trade at their post-reverse split price effective April 1, 2019. 

As a result of the planned action, shareholders of JNK have the potential to hold fractional shares; the treatment of those shares will be dependent upon custodial relationships, with some shareholders receiving cash in lieu of fractional shares.