Specialist exchange traded fund (ETF) provider, BetaShares, has launched an ETF that gives investors access to a portfolio of the world's leading sustainable and ethical companies in one investment.
The Global Sustainability Leaders ETF invests in approximately 100 large global stocks from developed market countries (excluding Australia) that are climate change leaders.
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To be defined as a leader, a company must have a carbon impact which is at least 60 per cent lower than the average carbon impact for the company's industry.
"Australians are increasingly using ethical investment options as they realise the impact their money can have on promoting positive environmental and social outcomes," says Alex Vynokur, BetaShares managing director.
The ETF is listed on the Australian sharemarket, ASX ticker code ETHI, and tracks an index created by the US Nasdaq - though distinct from Nasdaq's tech-laden indices.
The index screens-out companies deemed to have activities that are inconsistent with responsible investment best practices, including fossil fuels, gambling, tobacco, armaments and human rights concerns.
As well as screening-out companies it allocates to companies that stand to benefit from the global trend toward sustainability and healthy living.
Companies included in the index are those involved in developing renewable energy sites, tech companies benefiting from global innovation, healthcare companies and healthy-food companies.
The prices of units in ETFs change in-line with the index that is tracked. Units in ETFs are bought and sold just like shares.
ETFs are available that mirror not only the returns of sharemarket indices and sub-indices in Australia and overseas, but prices of commodities, among other markets.
The annual management fee of the BetaShares ETF is 0.49 per cent, much less than the management fees of "actively" managed funds – where the fund manager seeks to outperform the market by more than the higher management fees.
Future Super, the super fund founded by Simon Sheikh, the former national director of GetUp, aims to have about 15 per cent if its members' retirement savings invested in the BetaShares ETF.
Future Super bills itself as Australia's first super fund to be 100 per cent fossil fuel free.
"As the Future Super product has rapidly grown to over $200 million, it was important for us to make a significant allocation to international equities to ensure diversification for our members," Sheikh says.
"Prior to the launch of the Betashares product, no global equities ETF or managed fund available in Australia met our ethical criteria, including those put together by dedicated ethical investment managers," he says.
It is believed other super funds are looking at investing in the BetaShares ETF as it's a low-cost way of getting diversification in the industries of tomorrow.
Including this latest BetaShares launch, there are eight ETFs listed on the Australian sharemarket with some type of ethical screen with six of those provided by UBS.
BetaShares launched its first two ETFs on the Australian sharemarket in 2010 one covering the financials sectors and another tracking the resources sector.
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