Ocean health ETF
A newcomer to the ETF industry called Newday Impact is listing an actively managed ESG ETF that focusses on the health of our oceans.
The Newday Ocean Health ETF (AHOY) will hold a portfolio of 40-60 stocks believed to be supporting healthier oceans. Companies are scores based on CO2 emissions, waste-plastic production, ocean pollution, and environmental preservation. Those with very low scores are ineligible for the fund.
Companies are then screened for fundamentals and weighted by the conviction of portfolio managers. Stock weights are capped at 7.5%. The top stocks at the time of writing are Apple, Microsoft and Google, which have about 5% each. Other top picks include engineering firms Jacobs and Tetra Tech, and the GPS company Garmin.
The fund charges 0.75%.
Bernie’s commentary – impact ETFs: political activism as a consumer good?
I remember about 10 years ago there was this big fad for fair trade coffee. The idea was you should buy your coffee beans from companies that gave Columbian and Ethiopian coffee bean farmers better prices and fairer contracts. By buying fair trade coffee, its proponents (salesmen?) argued, you could make the world a better place by drinking coffee.
This ETF is in many respects offering something like fair trade coffee. The idea here is that you can consume your way to making the world a better place. And in this vision, none of the sacrifices and hard work that typically accompany political activism – marching in the streets, letters to politicians, organising campaigns, risking confrontation with your employer – are required to effect political change. You can make the oceans cleaner by buying an ETF—Newday and other impact ETF providers would have us believe.
This type of ETF attracts enemies as naturally as a pot of honey attracts bears. Conservatives lambast them as virtue signalling: Trump introduced legislation to stop advisers buying them. While leftists take it as self-evident that Wall St can never be a force for good. Meanwhile, it is unclear what impact, if any, impact ETFs actually have.
My own view is that the ETF product function and political activism are probably best kept separate. There’s a role for ESG ETFs that exclude fossil fuel companies as there’s a good chance they’ll outperform long run. But for those trying to create far-reaching political change – like de-acidifying the oceans – you’re better off writing to your local MP.