Alternative Investments/ESG: New ETF From Sovereign’s Capital To Invest In Faith-Driven Companies That Care For Employees
“We believe biblical values lead to strong cultures, which attract and retain talented employees. This, we believe, will contribute toward outperformance versus peer companies over the mid-to-long term.” – Sovereign’s Capital.
Sovereign’s Capital has unveiled Sovereign’s Capital Flourish Fund, an active ETF with a focus on companies that the issuer deems to be the most spiritually integrated. This debut ETF, trading on the New York Stock Exchange under the symbol NYSEARCA: SOVF, is designed to invest in companies led by faith-driven CEOs who foster exceptional corporate cultures aimed at achieving outperformance and the flourishing of employees.
Sovereign’s Capital believes that a company’s culture plays a pivotal role in creating a sustainable competitive advantage. They contend that adhering to biblical values results in robust cultures that attract and retain talented employees, thereby contributing to long-term outperformance compared to peer companies. (VettaFi)
The ETF focuses on the spiritual integration of companies and their commitment to fostering exceptional cultures for the benefit of both employees and shareholders – the fund says this effort takes up 99% of its time, and is akin to “searching for the needle in a haystack.”
SOVF encompasses U.S. companies across various market capitalizations and industries, offering a blend of both value and growth companies. The fund maintains a diversified portfolio consisting of 80-100 publicly traded companies, selected through the firm’s proprietary ranking methodology.
This methodology assesses companies across six categories: CEO spiritual integration, HR benefits & policies, chaplaincy, vision/mission/values, employee resource groups, and products & services. Each category receives a score from 0 to 10, with weighted factors that culminate in an overall score, guiding stock selection criteria.
In addition to their ranking methodology, the Sovereign’s Capital fund managers employ fundamental analysis, evaluating factors such as business quality, return on invested capital, balance sheet integrity, market expectations, cyclicality, and risk/reward.
SOVF’s selection process also focuses on companies that embody principles of “servant leadership” and prioritize treating others with kindness and respect. Furthermore, they seek companies that provide substantial HR benefits for their employees and maintain on-staff counselors to assist employees during challenging times.
“We vote every proxy ourselves and engage with companies directly. In addition to the positive impact on employees that the companies in our portfolio are already having today, we host roundtables to bring together the CEOs of the companies we invest in to discuss best practices with one another,” says the fund manager.
The Sovereign’s Capital ETF carries an expense ratio of 0.75%.
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