Alternative Investments/ESG: Thrivent Launches ESG ETF Focused On Small And Mid Caps

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The Thrivent Small-Mid Cap ESG ETF (NYSEARCA: TSME) will be actively managed.

Thrivent Asset Management has launched the Thrivent Small-Mid Cap ESG ETF (NYSEARCA: TSME) an ESG-focused exchange traded fund that will invest in small- and mid-cap stocks. The actively managed fund will maintain a portfolio of small- and mid-cap stocks across the growth and value spectrums that meet certain criteria for environmental, social, and governance practices. It is the firm’s first ETF launch. (ETF Trends)

Thrivent Small-Mid Cap ESG ETF (NYSEARCA: TSME)

The fund will be managed by lead portfolio manager Matt Finn and associate portfolio manager Chad Miller. It will invest in about 40 to 60 promising small- and medium-sized companies with attractive valuations that have demonstrated a commitment to ESG initiatives and furthering sustainable business practices.

Investments are screened using the third-party ESG materiality framework from the Sustainability Accounting Standards Board. The fund also screens out all companies that receive a CCC rating, which is the lowest category in the MSCI ESG rankings. (ETF Trends/VettaFi)

The fund invests in companies with sustainable long-term business models that have demonstrated their commitment to ESG policies.

Eligible firms may include those that are managing their impact on climate change and natural resources, promoting fair labor practices and inclusive workplaces, developing enhanced supplier and vendor relationships, and supporting robust corporate governance practices in relation to business ethics, board composition, executive compensation, and management incentives.

Fundspeak

The ETF has an expense ratio of 0.65%.

The fund utilizes the New York Stock Exchange’s active ETF structure known as AMS (Actively Managed Solution). The NYSE AMS model enables managers to avoid having to disclose daily portfolio holdings while maintaining the tax efficiency, liquidity, and lower costs typically associated with regular ETFs.

It achieves this through the use of a proxy portfolio that is designed to closely track an ETF’s performance but has a different composition and weighting to the ETF’s actual holdings.

“The fund combines Thrivent’s expertise in the small and mid-cap actively managed space with a proprietary environmental, social and governance analysis process,” said Miller. “Then we combine that with our bottom-up fundamental research process, complemented by engagement, to provide what we believe represents a unique offering in the marketplace.”

“We’re looking for companies that can create emissions as efficiently as possible in the short- to medium-term, and then ultimately reduce those over the long term,” Miller added. “We’re looking for companies that have a strategy to solve water scarcity challenges, consider biodiversity impacts, and then also invest in circular business models that create great efficiencies for the environment, as well as the individual companies.”

Thrivent Asset Management is a Fortune 500 company with $190 billion in assets under management or advisement.

Related Story: Two New ESG-Focused ETFs From OneAscent

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