Boston-based Changebridge Capital has introduced its first ETFs with the launch of two actively managed US equity strategies aligned to a sustainable investment mandate.

Ross Klein, Chief Investment Officer at Changebridge Capital.

The Changebridge Capital Long/Short Equity ETF (CBLS US) and Changebridge Capital Sustainable Equity ETF (CBSE US) have listed on NYSE Arca.

According to Changebridge, both funds take a technical, data-driven approach to stock selection before also applying fundamental analysis.

“We call it a ‘quantamental’ approach,” said Vincent Lorusso, Portfolio Manager at Changebridge Capital. “Our multivariate quant system is designed to actively identify inefficiencies, but that’s where fundamental analysis with a human touch takes over, to really drill down into the opportunities.”

Long/short

The Changebridge Capital Long/Short Equity ETF utilizes both long and short positions with the aim of generating risk-adjusted alpha over a full market cycle, typically between five and 11 years.

The portfolio, which is expected to have a net long exposure of 30%-70% of total assets, may hold companies from across the market cap spectrum but is expected to have a small and mid-cap focus.

Long positions are selected based on quality, value, momentum, size, and volatility factors, as well as ESG considerations that include a broad range of governance policies as well as the environmental impact of a company’s entire supply chain.

Short positions reflect firms that Changebridge believes will decline in value based on worsening fundamental metrics, such as revenue and earnings, weakening market positions, or over-hyped recent press coverage.

The fund comes with a punchy expense ratio of 1.70%.

Sustainable equity

The Changebridge Capital Sustainable Equity ETF, meanwhile, features a long-only concentrated portfolio of between 20 and 40 stocks with low turnover.

The fund utilizes a similar approach to security selection as described above for the long portfolio; however, eligible companies must also pass a more rigorous sustainability screen. Generally, firms that fall in the bottom quartile of all US-listed companies when ranked by a composite ESG score will be excluded.

The composite ESG score reflects how a company manages its energy use, waste, pollution, and natural resource conservation, its relationship with suppliers, customers, employees, and communities, as well as the accuracy and transparency of its financial disclosures and possible conflicts of interest.

The ETF comes with an expense ratio of 0.85%.

Ross Klein, Chief Investment Officer at Changebridge Capital, commented, “We’re thrilled to be launching our first two funds, CBLS and CBSE. By enabling investor access to actively managed funds that aim for a true active share, we feel we’re really levelling the playing field for investors who previously had difficulty accessing strategies like these, especially in the tax-efficient, transparent ETF wrapper.”

“On top of the quantitative and fundamental analysis, both CBLS and CBSE take sustainability characteristics into account when selecting their respective portfolios. This is a huge area of interest for many investors who wish to invest in accordance with their values. Moreover, the investing public has learned that ESG investing does not necessarily mean sacrificing returns.”