US ESG ETF launch for Hartford Funds
Global asset manager Hartford Funds, with USD153.8 billion in assets under management, is adding to its ETF range in the US, with the launch of its first ESG ETF.
Anita Baldwin, Head of Research & Sustainable Investing at Hartford Funds, explains that the Hartford Schroders ESG US Equity ETF (HEET) will invest in a diversified portfolio of US equities and investments that meet certain environmental, social, and governance criteria. HEET will be sub-advised by Schroder Investment Management North America Inc and Schroder Investment Management North America Ltd.
Baldwin says, “We started our sustainable investing back in 2016 and were signatories of the Principles for Responsible Investing in 2015, launching our first ESG strategy fund, the Climate Opportunities Fund in 2016.”
The drive to launch the first ESG ETF from the firm comes from client demand.
“We were working with our sub-advisers at Schroders in this space and thinking about how we can meet our clients’ needs,” she says.
“I think that we continue to see sustainable investment product grow pretty rapidly here in the US. We always assess our product line-up how as to how we can meet client needs and align with our investment capabilities. We believe that it’s a great time to marry the Schroders’ experience with an actively managed US ETF.”
The client focus for Hartford Funds is primarily US retail investors, who typically access the firm’s product suite through broker dealers.
“We have been noticing the trend and growing number of investor products in this space and we like to fill in any gaps we have in our product range,” Baldwin says. We don’t have an active ESG US equity ETF product and we feel that this fills that gap and meets the investment need.”
Baldwin adds, “We are really excited about this opportunity and the ability to leverage Schroders’ Systematic Investment team.”
HEET seeks long-term capital appreciation by investing in a diversified portfolio of equities and equity-related securities of U.S. companies and in investments that meet environmental, social, and/or governance criteria, as identified by the fund’s sub-advisers.
The fund will seek to achieve a better ESG profile compared to its benchmark, the Russell 1000 Index. Using a systematic investment approach developed by Schroders, companies in the universe will be assessed quantitatively on their ESG criteria and factor characteristics, including: Value, Profitability, Momentum, and Low Volatility.
ESG measures include, but are not limited to, the strength of environmental practices, climate change impact, and positive stakeholder relationships. HEET will seek to hold a diversified portfolio of US stocks with favourable combinations of ESG and factor exposures.
Additionally, the Fund is designed to have less than half the carbon footprint of its benchmark (Russell 1000), which is measured by the sub-adviser using carbon emissions divided by sales.
HEET is listed on the CBOE BZX Exchange, Inc. and its estimated expense ratio is 0.39 per cent. Ashley Lester, PhD, Head of Systematic Investments at Schroders, will serve as the portfolio manager of the ETF.