The soon to close fourth quarter 2020 will set new records for ETF launches. Already during this quarter, 18 new sustainable ETFs were launched as compared to a total of 18 that came to market during the first nine months of the year and 12 new sustainable ETFs that were added during 2019 (refer to Chart 1). These numbers include existing ETFs that were rebranded by formally adopting a sustainable investing mandate. The previous quarterly record was set in the second quarter of this year when 10 new sustainable ETFs were introduced.
The fourth quarter 2020 will also distinguish itself with first-time sustainable issuances on the part of two conventional mutual fund firms as well as the introduction of six esoteric values-based socially-oriented ETFs.
One of the new ETFs launched in December is the JPMorgan Carbon Transition US Equity ETF (JCTR). This thematic passively managed fund is designed to capture the performance of companies that have been identified as better positioned to benefit from a transition to a lower carbon economy while also providing broader U.S. market exposure. The second first-time achievement is the launch of ETFs by Dimensional Fund Advisors (DFA). Dimensional Fund Advisors (DFA) for the first time launched two core equity ETFs, the Dimensional US Core Equity Market ETF (DFAU) and the Dimensional International Core Equity Market ETF (DFAI), both listed for trading on the NYSE Arca. To complement these two actively managed funds, Dimensional also listed an Emerging Core Equity Market ETF in early December. The DFA funds employ a modified exclusionary form of sustainable investing.
Four firms launched six esoteric, narrowly-based, socially-themed equity ETFs, adding some $56 million in assets at the time of their flotation. These funds, that champion social justice, biblical alignment, pro-life, second amendment protections and border security as well veteran hiring practices, include: Adasina Social Justice All Cap Global ETF (JSTC), Inspire Faithward Large Cap Momentum ESG ETF (FEVR), Inspire Faithward Mid Cap Momentum ESG ETF (GLRY), 2ndVote Life Neutral Plus ETF (LYFE), 2ndVote Society Defended ETF (EGIS) and VictoryShares Top Veteran Employers ETF (VTRN). A combination of actively and passively managed investment vehicles, the funds carry high expense ratios that average 78 bps and range from 60 bps charged by VictoryShares Top Veteran Employers ETF to 89 bps levied by Adasina Social Justice All Cap Global ETF.
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Note of Explanation: While definitions continue to evolve, sustainable investing refers to a range of five overarching investing approaches or strategies that encompass: values-based investing, negative screening (exclusions), thematic and impact investing and ESG integration. Shareholder/bondholder engagement and proxy voting may also be employed along with one of more of these strategies that are not mutually exclusive. Prepared by: Sustainable Research and Analysis LLC.