AdvisorShares Launches Cousteau-Linked ETF
May 24, 2012
AdvisorShares, the Bethesda, Md.-based fund provider known for its active ETFs, today launched a broad ETF—in partnership with a foundation run by the grandson of the late oceanographer Jacques Cousteau—designed to deliver capital appreciation and that will give back to various social and environmental causes.
The AdvisorShares Global Echo ETF (NYSEArca: GIVE) will invest in various asset classes including domestic and global equity, fixed income, long/short strategies and other ETFs as it seeks to generate absolute returns that show a low correlation to traditional stock market indexes.
What’s unique about GIVE is that it also contributes to causes such as ocean conservation, renewable energy, social issues and technological innovation. It will achieve this objective by donating 0.40 percent of its 1.70 percent annual expense ratio to the Global Echo Foundation, co-founded by Philippe Cousteau Jr.
The foundation promotes sustainable development in a number of realms, spanning from social, environmental and entrepreneurial. AdvisorShares said on its website that it would also contribute beyond that amount to other charitable causes.
Charitable and sustainable investing such as GIVE hasn’t been seen since New York-based Global X Funds launched the Global X Food ETF (NYSEArca: EATX) last spring, in which the company said it would donate the management fee to Action Against Hunger/ACF International, a global humanitarian organization.
But EATX, costing a net of 0.65 percent, failed to attract assets and was liquidated less than a year later.
It remains to be seen whether GIVE will pick up where EATX left off, especially given its hefty price tag of an all-in cost of 1.70 percent, one of the highest expense ratios in the ETF market today.
GIVE is designed as a core allocation strategy. The fund will rely on four institutional portfolio managers to allocate to various asset classes.
The fund will focus primarily on companies that have sustainability mandates or that are actively engaged in environmental and social responsibility as well as corporate governance, often referred to as “ESG.”
“The full integration of ESG criteria into investment decisions is a strategy for identifying better-managed, more forward-thinking companies with better long-term financial prospects,” AdvisorShares said of GIVE’s securities-screening process.
At least 15 percent of the portfolio—and possibly as much as 65 percent—will be allocated to fixed-income instruments, the company said.
The four managers behind GIVE are known for their expertise in sustainable investing themes.
They include the Colorado-based First Affirmative Financial Network, which focuses on alternative long/short and hedging strategies, and a pair of Massachusetts-based groups known for core equity strategies—Reynders, McVeigh Capital Management and Baldwin Brothers.
Weston, Fla.-based Community Capital Management will bring the core fixed-income expertise into the mix.