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Transform 500 ETF

Invest in an ETF that helps passive investors drive positive impact as active owners.

Most financial advisors recommend buying and holding low-cost index funds. Rather than picking stocks, these funds invest in the most prominent companies that typically provide an ideal combination of growth and stability. That way, you have exposure to the most popular drivers of economic growth in the U.S. or worldwide.

The most popular index funds track the S&P 500 index. For instance, the S&P 500 SPDR ETF Trust (SPY) has over $300 billion in assets under management and charges a modest 0.095% expense ratio. The only downside of these large index funds is that investors aren't making a meaningful impact on the world with their holdings.

Harnessing the Vote


Every shareholder has a vote in corporate matters. For instance, if you hold one share of Apple Inc., you have an opportunity to cast a vote on any corporate issues (or bring up corporate matters to a vote). The problem is that mutual funds and ETFs cast votes on their shareholders' behalf and tend to vote based on money rather than values.

Engine No. 1's Transform 500 ETF (VOTE) tracks a market capitalization-weighted index of the top 500 U.S. stocks – just like the S&P 500 index. But unlike other S&P 500 index funds, the ETF campaigns for positive change at these companies by leveraging its proxy votes. As a result, its shareholders make a much more significant impact.

While the fund is relatively new, it already has one win under its belt against Exxon Mobil. In 2021, the fund successfully placed three candidates on Exxon's board of directors after a months-long campaign. These new directors promise to help the oil giant move away from fossil fuels and begin investing in green energy.

How It Fits in a Portfolio


The brilliance of Engine No. 1's Transform 500 ETF is that it's a drop-in replacement for any broad index equity allocation. Rather than only investing in renewable energy or other impact areas, the fund provides investors with broad exposure to U.S. equities while working behind the scenes to make an impact where it matters most.

In addition, the fund charges an expense ratio of 0.05%, making it a low-cost index fund on par with much more prominent ETFs. That means investors aren't sacrificing anything to create a more significant impact with their portfolios. The risk-reward characteristics are nearly identical to other funds that target broad U.S. equity allocations.

The Bottom Line


Engine No. 1's Transform 500 ETF (VOTE) offers investors an opportunity to make a difference without shifting their portfolio's risk-reward dynamics. While holding a similar set of the 500 largest companies as the S&P 500 index, shareholders can align their money with their values and participate in bottom-up, voting-driven changes at major companies.

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Dec 08, 2022

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Highlights

  • Invest in a broad basket of U.S. stocks while making a positive impact.
  • Align your money with your values by harnessing the power of the vote.