The HART fund also has an ESG twist because its index employs an exclusion screen based on compliance with the principles of the United Nation’s Global Compact, which calls on companies to align their operations and strategies with 10 principles in the areas of human rights, labor, environment and anti-corruption.
In addition, the index applies a screen that eliminates companies that exceed a minimum revenue threshold level in the following areas: those that operate in countries with oppressive regimes, and those involved in the adult content, alcohol, vaping, armament, gambling, nuclear, and tobacco and non-research, non-prescription or recreational cannabis sectors, or that use animal testing or genetic modification in research and development.
The end result will be a portfolio with 50 to 80 companies weighted on a modified market-cap basis and rebalanced quarterly.
IndexIQ entered the ETF business in 2008 with a focus on bringing lower-cost versions of alternative, hedge fund-like investment strategies to retail investors. It has subsequently broadened its product lineup to include more traditional equity and fixed-income strategies. It currently has 20 U.S.-listed ETFs on the market with total assets under management of roughly $4 billion.
While the HART fund isn’t yet open for business, some its particulars are available on the IndexIQ website. As of yesterday, the top five holdings were Eli Lilly, Johnson & Johnson, Apple, Novo Nordisk and Novartis.
The HART fund will participate in the booming health-care sector that has been one of the best-performing areas among U.S. equities. This space runs the gamut from big pharma and biotech to genomics and medical devices.
According to ETF Database's sector power rankings, the 60 ETFs it classifies within the health-care sector collectively ranked fourth in three-month fund flows, third in average three-month returns and second in aggregate assets under management as of January 18.