Engine No. 1 CEO on firm's mission: Activist investing enters the ETF realm

Can you make an exchange-traded fund out of activist investing?

Earlier this month, Engine No. 1 came out of nowhere and won three Exxon Mobil board seats after a six-month proxy fight. The company says Exxon needed to significantly reduce emissions and move toward a cleaner energy strategy.

Now, they are starting an ETF to promote their methods. Engine No. 1 Transform 500 ETF (VOTE) begins trading Wednesday.

The company says it is seeking “to encourage transformational change at the public companies” and that it will try to “measure the investment made by companies in their employees, communities, customers and the environment with financial, operational, and environmental, social and governance (‘ESG’) metrics.”

It is attracting outsized attention because it is the intersection between three hot investing themes: ETFs, ESG and activist investing.

It is unlike most ETF funds, which usually seek to buy or exclude companies that meet their investment criteria. A clean energy ETF, for example, might seek to own companies in wind, geothermal and solar and generally exclude fossil fuel companies that have not made significant commitments to cleaner energy investments.

VOTE is not like that. The ETF will track the Morningstar U.S. Large Cap Select Index, a large-cap fund similar to the S&P 500 that is market-capitalization weighted.

Here’s what’s different. VOTE is not trying to own companies that share its beliefs or exclude companies that do not. The shares that the company owns through the ETF will be used to vote in favor of climate change and other ESG proposals.

“They are playing the long game, so by owning Apple and Microsoft and other companies, they can use that to influence ESG standards,” said Todd Rosenbluth, director of ETF and mutual fund research at CFRA.

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[philomenajack]

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[googlebanmetoomuch]

So they're invested in FAANG😒 You and about 3 Billion other people! Get in line lady!

[JLT]

FRAUD!!!! now they are like “drill baby drill”. Gross fraudulent marketing BS

[nestorfont]

There’s really an etf for everything 😂

[TitusandTesla]

What a joke lmao. Buy something when it’s dirt cheap and then take credit for doing nothing.