Can an ETF Change the World? This Company Thinks So

2017-11-27 | Simpler Trading Team

There’s no shortage of ETFs from which investors can choose.

With low fees, passive management, and ever increasing popularity of ETFs, the funds are seeing a record boom. So what sets on ETF apart from the rest of the pack?

Every ETF is a different collection of indexes and stocks, which means choosing an ETF is based not only on performance and news, but on each trader’s personal preferences.

That’s why a recent ETF’s launch is capturing so much attention.

An asset manager called Change Finance has launched its first product, the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF (CHGX). This fund looks to capitalize financially from companies exemplifying environment, social, and corporate responsibility.

And it’s got a great opportunity to succeed.

By focusing on socially responsible equities and avoiding companies which produce or sell
tobacco, alcohol, or weapons, Change Finance is attracting the attention of a very particular (and large) market; the millennial.

Millennials are flocking to ETFs as investment vehicles. Plus, this generation champions social causes. Another factor that may attract new investors? Change finance is almost entirely run by women, offering a refreshing change from the Wall Street status quo.

However, it’s not just millennials who are likely to flock to CHGX.

In a study by independent investment research firm Morningstar, 70% of all investors are interested in socially responsible investing, while more than 80% of millennials intend to be socially responsible while making investment decisions.

It’s just smart investing. Companies which focus on social good are less likely to suffer penalties such as fines and lawsuits. Plus, renewable energy means lower operating costs, especially in the long term. That makes these businesses prime investment targets.

CHGX’s index starts off with the 1,000 largest U.S.-listed companies. The index then applies a series of environmental, social, and governance (ESG) screens to disqualify “bad” companies such as oil, gas, coal, or tobacco companies, along with companies noted to have engaged in any sort of business malpractice.

The index isn’t the first of its kind (iShares MSCI ACWI Low Carbon Target CRBN and SPDR S&P 500 Fossil Fuel Reserves Free ETF SPYX) but is the first to differentiate itself through activism.

Can CHGX compete against these other well known fossil fuel free ETFs?


By differentiating itself based on activism rather than simply environmentally friendly, the index can set itself apart and build a huge following, hopefully influencing more companies to change their practices and qualify for the fund.

Can one ETF change the world? It can’t hurt to try.

If you’re interested in learning more about ETFs, click here to register for John Carter’s free live ETF training.

Click here to register for John Carter’s free ETF training webinar

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