Firstly, the index uses forty information sources and public rankings to identify and evaluate companies based on ability to achieve positive outcomes across all five stakeholder groups, such as employee productivity, customer loyalty and corporate governance.
In the second step, the index uses composite analysis to apply deeper evaluation based on employee engagement, executive integrity, customer relationship quality, labor and human rights, and quality of financial reporting.
Lastly, a screen for consistent achievement is applied – a company must be qualified for inclusion in the Multi-stakeholder Operating System investable universe for at least three consecutive years. The index is then equally weighted.
Sector allocations include consumer discretionary 20.5%, industrials 17.5%, tech 17.3%, consumer staples 12.2%, health care 10.1%, financials 9.1%, energy 5.0%, materials 3.5%, utilities 2.8% and telecom 1.9%.
KRMA is the latest in a number of socially responsible ETFs to recently hit U.S. markets. For instance, the iShares MSCI EAFE ESG Select ETF (NasdaqGM: ESGD) and iShares MSCI EM ESG Select ETF (NasdaqGM: ESGE), which track developed and emerging market companies with high ESG ratings, began trading at the end of June.