Emerge rolls out sustainable multi-manager global equity ETF

Toronto-headquartered Emerge Canada has launched a new actively managed sustainable equity ETF.

The ETF utilizes Emerge’s proprietary ESG overlay to enhance its sustainability profile.

The Emerge EMPWR Unified Sustainable Equity ETF (EMPW US) has been listed on Cboe BZX Exchange.

The launch follows shortly after Emerge made its ETF debut in the US by listing a trio of equity funds that also contain socially responsible investment mandates.

Similar to those initial three ETFs, Emerge’s newest fund forms part of the firm’s ‘EMPWR’ line-up, a suite of products sub-advised by women-led, third-party asset managers.

Emerge notes that women investment portfolio managers are underutilized and underrepresented in the finance industry, and rules intended to support minorities may actually make it more difficult for women portfolio managers to own equity in smaller businesses. EMPWR seeks to break down these barriers by supporting exceptional women in portfolio management.

While each ETF’s portfolio is constructed by the relevant sub-advisor, Emerge will apply its proprietary ESG overlay to each fund, removing violators of international norms as well as firms with significant operations linked to weapons, thermal coal, adult entertainment, gambling, and recreational cannabis.

Additionally, any company selected for inclusion must rank in the top half of its universe according to Emerge’s broad sustainability score, while the portfolio itself must have an aggregate sustainability score within the top third of the total universe.

Investment approach

EMPW utilizes a multi-manager structure to provide exposure to four distinct equity strategies, combining multiple EMPWR investment managers and bringing multiple talents within a single product.

The ETF’s dividend yield sleeve, managed by Catherine Avery Investment Management, invests in dividend-paying North American companies that are considered able to maintain or increase their payments based on balance sheet and cash flow analysis.

The equity growth sleeve, managed by Grace Capital, invests in US mid-cap companies with long-term positive fundamentals trading at a discount to fair value based on proprietary discounted cash flow and valuation models.

The global core sleeve, managed by Zevin Asset Management, invests in companies worldwide, including those located in emerging markets, selecting securities based on a combination of fundamental research and global macro considerations. Zevin aims to beat the broader market by focusing on securities that are expected to outperform by minimizing losses in declining markets.

The emerging markets sleeve, managed by Channing Global, seeks to identify high-quality, emerging market companies that are positively aligned with secular and tactical themes such as changes in commodities pricing, interest rates, exchange rates, or regulation.

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