Stockholm (NordSIP) – In light of the continued popularity of sustainable investments, new players continue to enter the market seeking to provide returns to their clients that capitalise on ESG factors. On Wednesday, July 15th, American Century Investments launched its first two ESG ETFs, the American Century Sustainable Equity ETF (ESGA) and the American Century Mid Cap Growth Impact ETF (MID).
The two active ESG ETFs have total expense ratios of 0.39% and 0.45%, respectively and will use the New York Stock Exchange (NYSE) Actively Managed Solution℠ (AMS℠) a proxy portfolio tool. The funds will be primarily listed on NYSE Arca, Inc. with Citadel Securities, LLC as the lead market maker and State Street as the custodian.
“We believe these new ESG solutions offer investors the ‘best of both worlds:’ the alpha potential of active management with the advantages of ETFs, including low costs, tax efficiency and liquidity,” said Ed Rosenberg, head of ETFs for the firm. “This continues the next evolution of the ETF industry, and it expands opportunities for clients by enabling access to managers and strategies that had previously not been available, particularly in an ESG strategy.”
The American Century Sustainable Equity ETF is managed by Gregory Woodhams, CFA, Joseph Reiland, CFA, Justin Brown, CFA, Robert Bove and Rene Casis. It invests in large-cap stocks with improving business fundamentals and sustainable corporate behaviours. The portfolio managers’ approach focuses on “best-in-class” ESG integration by investing in companies that manage ESG risks and opportunities better than their sector peers. The ETF’s base investment universe is the S&P 500® Index, and its only formal exclusion is tobacco companies, but it overweights ESG industry leaders while avoiding laggards.
The American Century Mid Cap Growth Impact ETF (MID)is managed by Rob Brookby, Nalin Yogasundram and Rene Casis. It invests in high-quality mid-cap growth-oriented companies offering strong returns and a positive societal impact. The portfolio managers develop a macro and bottom-up investment thesis for each holding and using a risk-aware framework, constructs a portfolio that emphasises stock selection and alignment with UN Sustainable Development Goals (SDGs).
“In many respects, American Century remains a natural destination for investors wanting to have a positive impact on society by including actively managed ESG ETF strategies in their portfolios,” adds Jonathan Thomas, American Century Investments’ chief executive officer. “Our ESG solutions continue to grow, while our ownership model results in more than 40 per cent of our annual profits in the form of dividends being directed to funding medical research.”