What You Need to Know
- With this non-transparent ETF, Charles Schwab Investment Managemen joins a growing list of asset managers with active ETFs and ESG funds.
- Ariel Investments is the subadvisor of the planned ETF, which is known as the Schwab Ariel ESG ETF.
- The fund will invest primarily in small- and mid-cap stocks that meet certain ESG criteria.
Charles Schwab Investment Management is planning its first actively managed ETF, which also will be its first fund based on environmental, social and governance criteria.
The Schwab Ariel ESG ETF Strategic ETF is being subadvised by Ariel Investments, which will provide expertise on ESG; the new fund also will not disclose its actual holdings on a daily basis, as traditional ETFs do.
In its latest SEC filing, CSIM joins growing lists of asset managers with actively managed ETFs, including semi-transparent funds, and with ESG-focused funds.
The Schwab Ariel ESG ETF Strategic ETF is the firm’s first foray into the ESG space. It currently has no ESG-focused ETFs or ESG-focused mutual funds, though the Schwab platform provides access to both types of funds offered by other asset managers.
The Schwab Ariel ESG ETF will invest primarily in small- and mid-cap stocks that fall into the range of the Russell 2500 index and meet criteria set by Ariel Investments’ ESG strategy. It will trade on the NYSE, according to a filing with the SEC.
The ETF will not disclose its actual holdings on a daily basis as traditional ETFs do, but instead will post a daily proxy portfolio.
This portfolio “is designed to reflect the economic exposures and risk characteristics of the fund’s actual holdings,” including the percentage weight of those holdings, according to the SEC filing. Actual holdings will be disclosed quarterly with a 60-day lag via periodic regulatory filings.