Goldman Sachs looks set to launch ESG-based S&P 500 ETF

Dec 17th, 2015 | By | Category: Equities

Goldman Sachs Asset Management (GSAM), the asset management arm of the global investment bank, has plans to add to their growing lineup of smart beta exchange-traded funds with the launch of a new environmental and social responsibility-based ETF, according to a filing made with the US Securities and Exchange Commission.

Goldman Sachs looks set to launch ESG-based ETF

The Goldman Sachs ETF will offer exposure to US companies meeting environmental and socially responsible investing criteria, according to an SEC filing.

There has been a notable uptick of interest in sustainable investing in recent years. This has been driven by an increased desire to make a positive impact, concerns over the burgeoning risks of climate change and a belief that incorporating environmental and social criteria into the investment process can have a significant impact on performance and risk mitigation.

The Goldman Sachs S&P 500 Environmental & Socially Responsible ETF is expected to track an index of companies meeting environmental and socially responsible investing criteria while maintaining a risk and performance profile similar to the underlying reference, the S&P 500 Index. The index will exclude fossil fuel heavy industries, as well as companies engaged in the production and sale of tobacco and military armaments in excess of certain thresholds.

Companies with the highest ranking scores based on environmental and social factors are selected for inclusion in the index. These scores will be determined by RobecoSAM, a sustainable investment specialist, with the constituents weighted by their free float market capitalization. Scores are determined using RobecoSAM’s Corporate Sustainability Assessment methodology which utilizes over 100 questions for each specific industry to rank a company’s performance on environmental, social and economic dimensions.

The ETF will join a growing number of environmental, social and governance (ESG) based funds which, most recently, has included the launch of the SPDR S&P 500 Fossil Fuel Free ETF (SPYX) and the ETHO ETF (ETHO).

This current GSAM suite of ETFs includes three multi-factor smart beta funds launched earlier this year: the Goldman Sachs ActiveBeta US Large Cap Equity ETF (GSLC), the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) and the Goldman Sachs ActiveBeta International Equity ETF (GSIE).

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