New York-based Alger has introduced its third ETF, an actively managed fund providing exposure to US mid-cap growth stocks with better-than-average ESG profiles.
Joshua D. Bennett, Chief Operating Officer of Weatherbie Capital.
The Alger Weatherbie Enduring Growth ETF (AWEG US) has been listed on NYSE Arca with an expense ratio of 0.65%.
The fund utilizes Precidian Investment’s ActiveShares ETF structure which combines the benefits of a traditional ETF with the flexibility and confidentiality of an actively managed mutual fund.
Alger has delegated management of the ETF to its affiliate Weatherbie Capital, a Boston-based investment adviser known for its fundamental, bottom-up approach to investing in growth-oriented equities. H. George Dai, Chief Investment Officer, and Joshua D. Bennett, Chief Operating Officer are responsible for implementing the ETF’s strategy.
Joshua D. Bennett commented: “We believe the addition of an ESG scoring methodology into our fundamental bottom-up research process is an important and valuable tool for both stock selection and portfolio construction. We continue to field requests from investors that are interested in portfolios that integrate ESG considerations with quality and long-term growth potential. Our team-based approach enables us to create a high-conviction portfolio of what we believe are our best ideas that address both of these important factors.”
Investment approach
The ETF targets a concentrated portfolio of approximately 30 stocks sourced primarily from the Russell Mid-Cap Growth Index, the fund’s performance benchmark.
To be eligible for inclusion in the portfolio, a company must have an ESG rating of medium or better, according to Morningstar Sustainalytics. Specifically, no company may have an ESG score above 40 and, on aggregate, the ETF’s portfolio must have a weighted average ESG score of 25 or better (Morningstar Sustainalytics rates companies on a scale between 0-100 with lower scores indicating reduced ESG risk).
Securities that pass the ESG screen are then selected for the portfolio based on Weatherbie’s proprietary analysis that seeks to identify innovative and dynamic companies demonstrating strong earnings growth and sound stock market values.
All three of Alger’s ETFs are focused on growth-oriented investing although AWEG is the first to incorporate ESG factors into its investment approach.
The firm’s first two ETFs are the Alger 35 ETF (ATFV US) and Alger Mid Cap 40 ETF (FRTY US) which provide exposure to concentrated portfolios of growth stocks sourced from US large-cap and mid-cap equity segments, respectively. ATFV and FRTY house $10m and $30m in assets, respectively, and come with expense ratios of 0.55% and 0.60%.