Making a change
Change Finance: Best ESG ETF Provider – Founded in June 2016, ETF provider Change Finance launched The Change Finance US Large Cap Fossil Fuel Free ETF in October 2017, designed to democratise the process of aligning investor investment values with personal values.
Winner of the Best ESG ETF Provider in the 2019 US ETF Express ETF Awards, Change Finance’s CEO & CIO, Andrew Rodriguez, explains that the company came out of prior work that the co-founders had done in the wealth management space.
“We came to realise that the kind of impact we wanted to have in the investment space was only really available to high net worth or institutional investors,” he says. “One of the ways that we could have a broader impact, not just on the financial industry, but also on the wider population was to take the impact investing strategies and package them in a way that would be available to a broader audience.”
And that package was, of course, in the form of the ETF vehicle. “There was a desire to change the way people think about investing and the ability to align investment values in a way that doesn’t have to sacrifice performance,” Rodriguez says.
The index underlying the ETF is constructed with more than 50 different Environmental, Social, & Governance (ESG)factors to screen a starting universe of 1000 US equities resulting in an index with 100 holdings that is 100 per cent fossil fuel free.
“We set out to show that it wasn’t necessary to sacrifice performance to invest with our values and we believe that our performance relative to our benchmark, the S&P 500, has born that out,” Rodriguez says.
Enhanced ESG investing can offer a hedge against certain types of 21st century risks, President & COO, Dorrit Lowsen, says, listing stranded asset risk, litigation risk and social licence or reputational risk.
Stranded assets are those that a company holds which contribute to its valuation but will lose significant value, such as fossil fuels as the world moves to renewable energy. Litigation risk is self-explanatory but often occurs where companies are behaving in ways that are bad for people and the planet, Lowsen says, citing Pacific Gas & Electric which has been at the heart of the problems with wildfires in California.
In terms of investors, the focus has been on women and millennials who consistently indicate a strong preference for ESG screened investments, but they, alone, can’t account for the fact that a quarter of professionally managed assets are now invested with some form of ESG or SRI screen.
“It’s becoming increasingly mainstream, driven in part by the shift in the energy markets as renewable energy becomes cheaper than fossil fuels,” Lowsen says.
“Solar and wind power are now, on average, less expensive than natural gas so the economics are really changing, which will drive a shift in how people think about investing,” she says.
Initially, the firm focused on finding investors through independent financial advisers, particularly those already targeting ESG and SRI investing.
“But increasingly we find interest from all types of traditional advisers who recognise that they need to learn about this part of the market as they talk to investors,” Lowsen says. n
An investor should consider the Fund’s investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the Fund’s prospectus. To obtain a prospectus, please call 303- 339-0525 or visit http://changefinanceetf.com/ chgx/prospectus. Please read the prospectus carefully before investing.
The Change Finance US Large Cap Fossil Fuel Free ETF is distributed by Quasar Distributors, LLC. The fund’s investment advisor is Change Finance, PBC. and Change Finance, PBC owns the index that underlines the fund. Quasar is not affiliated with Change Finance.
President & COO, Change Finance
As a leader in Fortune 500, start-up, non-profit, and government, Dorrit Lowsen has built extensive operational experience, including as the COO of Agora Partnerships, a social enterprise accelerator programme. Her impact investing experience includes both public market and private placement investing, field-building, and entrepreneurship. She has won awards for her work on environmental and energy policy at the US Embassy in Beijing, and holds an MBA from NYU Stern.
CEO & CIO, Change Finance
With a sense of ethics and responsibility honed during his early career as a pastor, Andrew Rodriguez has dedicated his financial career to sustainable and responsible investing. He has built and managed ESG, SRI, and fossil fuel free portfolios for a variety of firms that specialise in ethical investing. Andrew holds an MBA in Sustainable System and Impact Investing from Bainbridge Graduate Institute, the first “Green MBA” programme.