San Francisco-based Adasina Social Capital, an investment and financial activism firm, has launched its first ETF – a global equity strategy that invests according to social justice principles.
The fund provides exposure to companies working to advance equitable systems.
The Adasina Social Justice All Cap Global ETF (JSTC US) has listed on NYSE Arca and comes with an expense ratio of 0.89%.
It has been brought to market in partnership with private-label ETF platform Tidal ETF Services.
The fund is powered by a proprietary index, the Adasina Social Justice Index, which was developed in partnership with thematic index specialist EQM Indexes.
The index provides exposure to a global portfolio of companies whose business practices are aligned with Adasina’s ‘Social Justice Investment Criteria’ while excluding companies whose practices are considered to impede the advancement of equitable systems.
The starting universe covers both developed and emerging market stocks with market capitalizations above $300 million and average daily trading values greater than $1m.
Security selection is driven by data provided from a network of social justice movements reporting on the issues most directly affecting their communities.
The index selects the companies most-aligned with four main categories of social justice: Racial Justice (notable issues include decarceration, equity & inclusion, and land rights & self-determination), Gender Justice (gender equity and LGBTQ+ equality), Economic Justice (fair lending and fair labour), and Climate Justice (clean air & water and environmental sustainability).
Constituents are weighted using an optimization process based on Bloomberg’s Global Risk Model. This process splits the constituents into three size segments – large, mid, and small-cap stocks. Each segment is then optimized using a multi-factor approach that seeks to minimize active risk relative to its respective global size benchmark. The three segments are then recombined, targeting weights of 70% for large-caps, 20% for mid-caps, and 10% for small-caps.
The index is reconstituted and rebalanced on a semi-annual basis, although the fund may respond immediately to exclude constituents that have been identified as ‘bad actors’.
As of the beginning of December, the index contained 891 constituents with 88% of its weight in developed markets and 12% in emerging market stocks. The US accounted for half (49%) of the index weight, followed by Japan (6%), Canada (4%), Germany (4%), and the UK (4%). Companies in the Information technology and financial sectors made up 23% and 22% of the index, respectively, followed by healthcare (14%) and industrials (14%).
Rachel Robasciotti, co-Founder and CEO of Adasina Social Capital, commented, “People with social justice values have been extremely drawn to our investment approach. By sourcing our data straight from impacted communities, through close relationships with social justice leaders, we have the unprecedented ability to direct investor capital to the issues most critical to long-term change. We created the Adasina ETF to give every investor the opportunity to invest in line with social justice values, in almost any account, while still maintaining their relationship with their financial advisor.”
Maya Philipson, co-Founder and COO of Adasina Social Capital, added, “We’re proud of the opportunity we’ve created to address intersectional justice with the Adasina ETF. Most existing ESG funds use passive screens that are limited in their approach – they address only one, singular issue area. Our investment approach acknowledges that many areas of injustice disproportionately affect communities already suffering from other systemic problems, and our index was created specifically to address this intersectionality.”