Socially conscious investors can look forward to two new exchange-traded funds that aim to direct capital to companies that do well by minorities and women.
Using the values and mission of the National Association for the Advancement of Colored People, or NAACP, and the YWCA Metropolitan Chicago — and with a $300,000 grant from the Rockefeller Foundation — the not-for-profit Impact Shares on Tuesday launched the Minority Empowerment ETF and the Women’s Empowerment ETF.
The Impact Shares Minority Empowerment ETF, with the ticker symbol “NACP,” will invest in companies that empower minorities through hiring, pay and promotion practices as well as their products and services.
The Impact Shares YWCA Women’s Empowerment ETF, whose ticker symbol is to be “WOMN,” will hold stocks of companies that empower women, including promoting women’s health and women’s initiatives.
Impact Shares is a nonprofit ETF issuer and investment manager, which says its mission is to “build a platform to better align capital with meaningful social priorities that have greater impact and at lower prices.”
Impact Shares partners with other nonprofits with social missions and plans to direct all of the funds’ advisory profits of the individual ETFs back to the partner.
“While large pension funds already incorporate ESG [environmental, social and corporate governance] factors into the portfolio strategies, there is a still big demand for investments that are specifically aligned with social issues. For example, historically black colleges and universities, would like to allocate capital for funds that empower minorities,” said Ethan Powell, founder and president of Impact Shares.
“The ‘S; or social issues and priorities in the ESG is not as well-defined as the environmental consideration or governance issues. In fact, it’s the messy middle,” Powell said. “So to come up with a system to score companies on the social impact we partnered with the NAACP and YWCA.”
For the YWCA ETF, Impact Shares will pick companies from a subset of the largest 1,000 U.S. stocks with the market cap of at least $2 billion.
The selection is based on criteria such as gender balance at executive and management levels, compensation and work-life balance, and policies promoting gender equality.
For example, among other criteria, companies will receive scores based on whether they have anti-sexual-harassment and antibullying or anti-violence policies in place.
The fund will be competing with several existing ETFs that are geared toward empowering women. For example, SPDR SSGA Gender Diversity Index ETF SHE, with $330 million under management, and Pax Ellevate Global Women’s Index Fund PXWIX, with $146 million. Barclays Women in Leadership ETN WIL,has $34 million under management.