Schwab Asset Management offers a new ESG ETF

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Schwab Asset Management is launching an ESG ETF to be managed by Ariel, a global, value-based asset management firm based in Chicago.

Schwab Ariel ESG ETF is an active, semi-transparent ETF that invests in small and mid-cap stocks that have been selected based on environmental, social and governance factors. The new ETF will be under-advised by Ariel Investments, an African-American-owned investment firm that integrates ESG factors into its investment process. The first day of trading is expected to take place on or around November 16.

The Schwab Ariel ESG ETF will provide investors with access to the proprietary ESG investment process pioneered by Ariel, Schwab Asset Management said. The fund seeks to generate long-term capital appreciation. It can be used as a basic or complementary ESG equity allocation within a portfolio.

The Schwab Ariel ESG ETF offers active management in a semi-transparent ETF. Ariel’s focus on value stocks and small and mid-cap equity securities differentiates the new ETF from most ESG strategies, which tend to favor growth stocks and large-cap stocks, said Schwab Asset Management.

The fund will have an ESG risk rating for each participation or potential participation. In addition, Ariel will use a negative filtering process in the selection of securities for the fund to exclude companies whose primary source of income is from the production or sale of tobacco products, from the exploration or extraction of tobacco products. fossil fuels, the operation of private prisons or prisons and the manufacture of controversial firearms, personal weapons, small arms or military weapons.

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