Engine No.1, the US activist fund behind the historic board revolt at Exxon last month, has launched an impact-focused exchange traded fund (ETF), which has already attracted $100m from unnamed investors.
The Transform 500 ETF (ticker: VOTE) will buy shares in large US companies with a view to improving their environmental and social performance through shareholder voting, campaigns and investor collaboration. Unlike most ESG-branded ETFs, Engine No.1 won't exclude or re-weight stocks.
“The problem isn’t passive investing, it’s passive ownership,” said Engine No.1’s Managing Director, Michael O’Leary, referring to long-standing criticism that index-based investment strategies are too restrained and hands-off to achieve real-world impact. “Too many sustainable investing strategies shift an investor’s exposure away from companies that need to change rather than working to change them. We see an opportunity to harness the power of investors in a new way.”
Engine No.1 only launched in December, but its debut campaign at Exxon has seen it make headlines around the world, culminating last month in the appointment of three of its four ‘climate competent’ nominees to Exxon’s board. The trio, which Engine No.1 argued were necessary to help the oil major navigate the green energy transition, were chosen by investors in a dramatic annual vote and will replace incumbents on the board.
Reports on the investor's planned ‘socially conscious’ ETF circulated earlier this month based on a filing at the US regulator, but it has now been formally announced.
As part of the launch, Engine No.1 has also announced that it has partnered up with US-based digital investment advisory Betterment, which will integrate the new ETF into all of its socially responsible investing strategies.
Transform 500 ETF, which has an annual expense ratio of 0.05%, was established under the direction of Engine No.1’s CEO Jennifer Grancio, a former founder and senior executive of BlackRock’s iShares business. Yasmin Dahya Bilger, former Head of Americas Beta Specialists at JP Morgan, is leading the work on the ETF.