Emerge Canada -- which counts Cathie Wood's ARK Invest as a sub-adviser -- recently launched a number of "ESG"-focused funds in Canada and the U.S. through its EMPWR platform.
This new environmental, social, and governance initiative focuses on raising both the profile and assets under management of a roster of female investment portfolio managers.
The funds, launched earlier this month, include the Emerge EMPWR Unified Sustainable Equity ETF (EMPW) , Emerge EMPWR Sustainable Dividend Equity ETF (EMCA) , Emerge EMPWR Sustainable Select Growth Equity ETF (EMGC) , Emerge EMPWR Sustainable Global Core Equity ETF (EMZA) , and Emerge EMPWR Sustainable Emerging Markets Equity ETF (EMHC) .
Interestingly, the funds are advertised as having a management fee of 85-basis points on the website, but it is only in the fund prospectus where investors find that they should expect a total fee of 95-basis points after a 10-basis point waiver. This means that a shareholder with $1,000 invested over a calendar year would expect to pay $9.50 in fees.
Sustainable Vs. ESG
Reading through the issuer's website, the homepage doesn't have any big ESG banners, but rather, offers a concise outline of what their goal is for investors. It's not until you get to the individual fund pages that they outline their "commitment to sustainability" by stating their ESG focus rests on the categories of ESG material issues, climate change, diversity and inclusion, and social governance. They mention Sustainalytics as one of their ESG scoring providers and emphasize that they also employ negative screens which knock any company with more than 20% revenue exposure to biological and chemical weapons, thermal coal, gambling, adult entertainment, tobacco production, cannabis, and alcoholic beverages.
Reading through the prospectus, each of the subadvisors has their own approach to evaluating and selecting names of each portfolio with some employing a bottom-up approach (relying primarily on company fundamentals) while others use a mix of bottom-up and top-down (taking macro-economic variables into account) approaches to stock selection.
Full holdings are available on the website, but only in PDF form, so if anyone from Emerge is reading this, please see to making these available in spreadsheet or flat file formats if only to make it easier for evaluators to evaluate your products. That said, looking through the holdings I didn't see anything that jumped out at me, although I was a little surprised to see names like Chevron (CVX) , Valero Energy (VLO) , and perennial world's top polluter Coca-Cola (KO) in a suite of funds billing themselves as sustainable.
Wrap It Up
While researching this issuer, I found the parent company's Form ADV Part II, which outlines that the firm manages roughly $1.17 billion in discretionary assets. This tells me it's doing something right. Considering advisory account minimums of $50,000 to $100,000 per the firm's disclosures, having access to these managers at the minimum of the price of one share of any of these ETFs just might be worth a closer look.
