Investors looking to apply socially responsible investing tactics to their portfolios while adhering to environmental, social and governance (ESG) principles have another new exchange-traded fund to consider.
The Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF (NYSE: CHGX) debuted on Tuesday. That new ETF tracks the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index, which is an equal-weight basket of 100 large-cap U.S. companies that meet certain ESG criteria.
“CHGX's methodology is informed by the United Nations Sustainable Development Goals (SDGs). These internationally agreed-upon standards seek to eradicate poverty, protect planetary life support, and achieve lasting peace and dignity for humanity,” according to a statement issued by Colorado-based Change Finance. “Change Finance, devoted to providing impact-focused, performance-oriented investments, uses the SDGs to craft investment options for customers who care about impact and income.”
More Than Just Excluding Fossil Fuels
As its name implies, the Change Finance Diversified Impact U.S. Large Cap Fossil Free ETF excludes shares of fossil fuels producers. Several established ETFs do that and/or look to minimize exposure to the energy sector, but CHGX goes further.
“Fossil fuel-free is essential, but CHGX then goes further, divesting not only from companies who dig up, refine, burn and service fossil fuels, but also from companies that are serious polluters, that have significant human or labor rights violations, and that fail to meet a variety of other social and environmental standards. No other ETF does this,” said Change Finance CEO Donna Morton in the statement.
CHGX's top 10 holdings include companies from the technology, financial services, healthcare, industrial and consumer discretionary sectors.
What Else Is Out
In addition to excluding fossil fuels producers, CHGX does not hold shares of companies that make pesticides or manufacturer military weapons, among other controversial products. The new ETF also excludes companies that “engage in corrupt business practices or have exploitative relationships with labor and Indigenous people.”
CHGX charges 0.75 percent per year, or $75 on a $10,000 investment.
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