BetaShares has launched a new Australian company ETF that employs both positive and negative ethical screens.
The Australian Sustainability Leaders ETF, which trades under the ASX ticker FAIR, tracks a customised index created by NASDAQ for BetaShares.
In order to be included on the index, companies must be listed on the ASX, have a float-adjusted market capitalisation of at least US$100 million, and not be screened out under responsible investment criteria.
The business activities screened out are gambling, tobacco, armaments, uranium/nuclear energy, destruction of valuable environments, animal cruelty, chemicals of concern, mandatory detention of asylum seekers, alcohol, junk foods, pornography, human rights/supply chain concerns, lack of gender diversity at the board level, and payday lending.
An additional positive screen is employed which excludes companies unless 20 per cent of their revenue is derived from a sustainable practice (such as renewable energy).
As a result of the positive screen, all four of the major banks are excluded from the ETF.
The launch of the fund follows the January 2017 listing of the BetaShares Global Sustainability Leaders ETF, which has gathered approximately $120 million in assets to date.
Commenting on the launch of FAIR, BetaShares managing director Alex Vynokur said: “Demand for sustainable investing products is on the rise in Australia. More and more investors, especially younger Australians, are conscious about where their money goes and what kind of business activities they support.
“What started as a niche area for not-for-profit investors and religious groups has now evolved into a strong and positive trend of increased consciousness regarding financial investments. We believe responsible investing will only continue to gain relevance.
“For example, due to the impact of the broad-ranging methodology used by FAIR, its portfolio excludes the majority of mining stocks, including BHP and RIO, as well as the big four banks.”
BetaShares expects to launch additional responsible and ethical products in the future, Mr Vynokur added.
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