New ESG ETF targets booming ethical shares market

Meet the ASX’s newest ethical ETF…

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It’s no secret that ESG (Environmental, Social and Corporate Governance) and ethical investing have taken off as hot investing trends over the past few years. The idea that investors can make both a healthy return, as well as investing in the companies driving the transition to a cleaner, greener future, has proved to be very appealing. And when there is a hot trend in the share market, you can bet there will be exchange-traded funds (ETFs) following it.

The ASX has indeed seen a rise in the popularity of ethical or ESG ETFs. The ones that are already on the ASX boards have seen their assets under management soar in recent years. An example would be the BetaShares Global Sustainability Leaders ETF (ASX: ETHI).

But now, another ESG ETF is set to join these ranks.

The ASX gets a new ESG ETF

This new ETF comes from fund manager Janus Henderson Group (ASX: JHG). It will be known as the Janus Henderson Global Sustainable Equity Active ETF (ASX: FUTR). This ETF will follow an ‘active ETF’ model. This means it won’t be an index fund. Instead, it will track a concentrated portfolio of shares, selected and maintained by a fund manager and team. The underlying fund that this new ETF will track has been around for decades over in the United States and other countries. But it is now available on the ASX as well.

Janus Henderson tells us that the fund will invest in a “high-conviction portfolio”. The shares that make the cut will be “selected for their compounding growth potential and positive impact on the environment and society”. It will also actively avoid any company “that the investment manager considers to potentially have a negative impact on the development of a sustainable global economy”.

This new ESG ETF will aim to outperform its benchmark MSCI World Index over rolling 5 year periods. It will charge its investors a management fee of 0.8% per annum. FUTR will also aim to pay out a dividend distribution semi-annually if circumstances allow. The fund will also have a cash ceiling of 20%. This means at least 80% of funds will be invested at all times.

The manager has released an initial portfolio for this ETF. It includes mostly international companies like Microsoft Corporation (NASDAQ: MSFT), Autodesk, Inc. (NASDAQ: ADSK) and Adobe Inc (NASDAQ: ADBE). As well as Taiwan Semiconductor Manufacturing Company Ltd (NYSE: TSM) and Nintendo Co,. Ltd (TYO: 7974). It even has a small allocation to the ASX’s own Nanosonics Ltd. (ASX: NAN).

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Autodesk, Microsoft, Nanosonics Limited, and Taiwan Semiconductor Manufacturing. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adobe Inc. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Adobe Inc. and Autodesk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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