Alternative Investments/ESG: Engine No 1 Rides Momentum Of Exxon Win With ETF Launch
Engine No 1, the dark horse and little-known activist investor, sent waves through the corporate world after wresting three seats on Exxon’s board.
It’s been nearly a month since that seismic day when Engine No 1 won backing from key institutional investors in Exxon Mobil Corporation (NYSE: XOM) and got three of its representatives to sit on the energy giant’s board. Engine demanded that Exxon shift its operations and significantly reduce emissions in order to ensure long-term financial viability. (OilPrice.com)
Engine No 1 is making waves again, this time with the announcement of the launch of its first ETF – Engine No. 1 Transform 500 ETF. Unlike most other ETFs with an ESG focus, Transform will use its holdings as leverage in shareholder voting and activist campaigns.
Engine No 1 Transform 500 ETF
Appropriately, the new ETF is assigned the ticker VOTE. It will invest in a market-cap weighted index of the 500 largest U.S. stocks and will seek to track the Morningstar U.S. Large Cap Select Index.
However, rather than excluding or re-weighting stocks, VOTE will seek to improve companies’ environmental and social impacts through its votes, campaigns and onboarding investors to support these campaigns.
Engine No 1 also said in a statement that Betterment, the largest independent digital investment advisor, will be integrating VOTE into all of its socially responsible investing (SRI) strategies.
The fund has an annual expense ratio of just 0.05%.
An instrument of corporate change
“The problem isn’t passive investing, it’s passive ownership,” said Engine No. 1 Managing Director Michael O’Leary. “Too many sustainable investing strategies shift an investor’s exposure away from companies that need to change rather than working to change them. We see an opportunity to harness the power of investors in a new way.”
Index funds as collection action vehicles!
“VOTE can disrupt the idea of what it means to be an index fund, while retaining its most appealing feature—low cost,” said Boris Khentov, SVP of Operations at Betterment.
“We share Engine No. 1’s vision that index funds should serve as collective action vehicles for sustainability-minded investors and are excited to integrate this groundbreaking ETF into our SRI strategies,” Khentov added.
Image Credit: Flickr
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