Schwab Asset Management is launching an ESG ETF to be managed by Ariel, a global, values-based asset management firm based in Chicago.
Schwab Ariel ESG ETF is an active, semi-transparent ETF that invests in small- and mid-cap stocks that have been screened based on environmental, social and governance factors. The new ETF will be sub-advised by Ariel Investments, an African-American-owned investment firm that integrates ESG factors into its investment process. The first day of trading is expected to be on or about November 16.
The Schwab Ariel ESG ETF will provide investors with access to the proprietary ESG investment process pioneered by Ariel, Schwab Asset Management said. The fund seeks to deliver long-term capital appreciation. It can serve as a core or complementary equity ESG allocation within a portfolio.
The Schwab Ariel ESG ETF offers active management in a semi-transparent ETF. Ariel’s focus on value and small- and mid-cap equity securities differentiates the new ETF from most ESG strategies, which tend to skew toward growth and large-cap securities, Schwab Asset Management said.
The fund will have an ESG risk rating for each holding, or prospective holding. In addition, Ariel will employ a negative screening process in the fund’s security selection to exclude companies whose primary source of revenue is derived from the production or sale of tobacco products, the exploration for or the extraction of fossil fuels, the operation of private prisons or jails, and the manufacture of firearms, personal weapons, small arms, or controversial military weapons.