Hartford Funds Jumps Into ESG ETF Market

Hartford Funds launched its first environmental, social and governance-focused exchange-traded fund.

The Hartford Schroders ESG US Equity ETF (HEET) trades on the Cboe BZX Exchange with a net expense ratio of 0.39% and is subadvised by Schroder Investment Management North America Inc. and Schroder Investment Management North America Ltd. Ashley Lester, head of systematic investments at Schroders, is serving as portfolio manager.

Hartford didn’t say why it decided to jump into the ESG ETF space right now and did not immediately respond to a request for comment.

But a growing number of firms are jumping into the ESG space to meet increasing investor demand, while firms that already threw their hat in the ring have increased their offerings in recent months. For example, Fidelity Investments said in June it was launching five new actively managed funds focused on ESG factors — three mutual funds (two equity, one bond) and two active semi-transparent equity ETFs.

HEET seeks long-term capital appreciation by investing in a diversified portfolio of equities and equity-related securities of U.S. firms and in investments that Hartford said are expected to meet ESG criteria, as identified by the fund’s subadvisors. The fund will look to achieve a better ESG profile compared to its benchmark, the Russell 1000 Index.

HEET will seek to hold a diversified portfolio of U.S. stocks with favorable combinations of ESG and factor exposures, according to Hartford. The Fund was also designed to have less than half the carbon footprint of its benchmark, measured by carbon emissions divided by sales, Hartford said.

Using a systematic investment approach developed by Schroders, companies in the universe will be “assessed quantitatively on their ESG criteria and factor characteristics,” including: value, profitability, momentum and low volatility, Hartford said.

The new ETF enables Hartford to offer a “flexible, cost-effective strategy that is designed to help investors achieve their long-term investment goals, while also having a positive influence on our world,” according to Vernon Meyer, Hartford Funds chief investment officer.

“We believe that applying ESG principles to an ETF, and leveraging Schroders’ quantitative investing expertise and proprietary approach to ESG investing, can provide stronger returns and make for a better investor experience on multiple levels,” he said in a statement.