New Socially Responsible ETF Hits The Market, Focusing On The Disabled

The ETF industry has been evolving, stretching into new markets and niches. The focus on just market capitalization, dividend payments or equal weight is gradually taking the backseat while tricky smart-beta approaches or some socially relevant focused funds are showing up.

In fact, socially responsible ETFs are very much in vogue. Investors appear concerned about the future of the environment and corporate practices, and the effect that these might have on their investing portfolio (read: The Guide to Socially Responsible ETF Investing).

Moreover, growing health consciousness among global consumers, most developed and emerging countries’ aim of building a pollution free environment, and upper hands of human rights have made socially sensitive companies compelling investments for many in today’s market.

Renowned issuers like iShares, Barclays and ALPS have already made their presence felt in this category. In fact, Barclays recently launched a new socially aware product namely Return on Disability ETN RODI after rolling out its maiden socially conscious product Barclays Women in Leadership Index WIL in July. The new product hit the market on September 12, 2014 (read: Invest in Women-Run Companies with This New ETF).

How the Fund Works

RODI seeks to track the performance of the Return on Disability US Large Cap ETN Total Return USD Index which zeroes in on companies that have very favorable policies towards the disabled, both as customers and workers.

The index follows a quantitative method to gauge a company’s widely visible activities with regard to such people across three important criteria: talent, customer and productivity, per the press release.

The benchmark screens those companies which have the potential to enhance shareholder value by concentrating on user-friendly features in products and services, and implementing productivity-focused process improvements driven by people with disabilities.

The index theoretically looks to track the returns of a portfolio of up to 100 large cap stocks screened on the basis of the Return on Disability Binary Ranking, which is designed by the Return on Disability Group (an affiliate of the Donovan Group LLC). However, the concerned companies should also meet the definite benchmark of market capitalization, trading volume and financial capability.

Some of the top companies in this index include Walt Disney DIS, PepsiCo PEP and Chevron CVX.  It is also worth mentioning that the portfolio is heavy on the consumer discretionary sector (22%). The ETN charges 45 bps in fees. 
 

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Disclosure: None.

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