Schwab Asset Management, the asset management arm of The Charles Schwab Corporation, has started trading the Schwab Ariel ESG ETF (SAEF).
The firm writes that SAEF is an active, semi-transparent (also known as non-transparent) ETF that invests in small- and mid-cap stocks that have been screened based on environmental, social and governance (ESG) factors. The fund is sub-advised by Ariel Investments, LLC (Ariel), a pioneer in ESG investing.
“This fund is breaking new ground on a number of levels as the first ESG fund and first active ETF from Schwab Asset Management and the first ETF sub-advised by Ariel Investments,” says Malik Sievers, Head of ESG Strategy, Schwab Asset Management. “We are excited to bring a new option to market for retail investors and advisors who are looking for opportunities to invest according to their values.”
The Schwab Ariel ESG ETF seeks to deliver long-term capital appreciation by leveraging Ariel’s value-based investment process, which is focused on small- and mid-cap US companies with favourable ESG characteristics as measured by Ariel’s ESG risk rating process. Additionally, Ariel employs a negative screening process in the fund’s security selection, which seeks to exclude from the fund companies whose primary source of revenue is derived from the production or sale of tobacco products, the exploration for or the extraction of fossil fuels, the operation of private prisons or jails, and the manufacture of firearms, personal weapons, small arms, or controversial military weapons.
SAEF offers active management in a semi-transparent ETF and can serve as a core or complementary equity ESG allocation within a portfolio. The fund has an operating expense ratio (OER) of 59 bps.