Legg Mason has partnered up again with ClearBridge to launch two environmental, social and governance, or ESG, focused exchange traded funds with an active touch to help investors better hone in on shifting business focuses and regulatory issues.
On Tuesday, Legg Mason rolled out the actively managed ClearBridge Large Cap Growth ESG ETF (NasdaqGM: LRGE) and the ClearBridge Dividend Strategy ESG ETF (NasdaqGM: YLDE). Both funds come with a 0.59% expense ratio.
YLDE will be managed by the ClearBridge team, including Harry D. Cohen, Peter Vanderlee, Michael Clarfeld and Mary Jane McQuillen. LRGE will be managed by Peter Bourbeau, Mary Jane McQuillen and Margaret Vitrano.
“For over 25 years, our firm has prioritized integrating ESG factors into our investment process and developing a proprietary ESG rating system across our research platform,” Terrence Murphy, Chief Executive Officer of ClearBridge Investments, said in a note. “ESG analyses are a core part of our fundamental research process and are done for every company in our coverage universe. Our new active ETFs, ClearBridge Large Cap Growth ESG and ClearBridge Dividend Strategy ESG, will leverage this unique ESG expertise.”
Mary Jane McQuillen, Managing Director, Portfolio Manager and Head of Environmental, Social and Governance Investment for ClearBridge, explained that ClearBridge provides investors exposure to one of the longest continuous ESG track records. For example, their large-cap ESG strategy has already accumulated 15 years worth of performance.
ClearBridge also focuses more on the benefits and strong fundamentals found within ESG-related investments as opposed to those who would only seek out companies with strong ESG principles based on personal values.
“We thought this was an investment process for the long-term; it is not just a values investment,” McQuillen told ETF Trends in a call.
McQuillen pointed out that they employ a team of sector analysts that undergo thorough financial research, along with the ESG research, to screen and select component holdings.
The ClearBridge Large Cap Growth ESG ETF will try to generate long-term capital appreciation through investing in large-cap companies with the potential for high future earnings growth, along with strong ESG characteristics. The managers will target companies with sustainable competitive advantages based on differentiated business models, high returns on capital, strong balance sheets and capable management teams that allocate capital in an efficient manner.
The ClearBridge Dividend Strategy ESG ETF will try to generate dividend income, growth of dividend income and long-term capital appreciation. The management team will leverage fundamental analysis to select a diversified portfolio of leading companies with long histories of paying and raising dividends, along with strong ESG characteristics.
The ESG characteristics are based on the manager’s proprietary research and twenty-five year history of managing ESG investment strategies. Determining factors when evaluating ESG characteristics include innovative workplace policies, employee benefits and programs; environmental management system strength, eco-efficiency and life-cycle analysis; community involvement, strategic philanthropy and reputation management; and strong corporate governance and independence of the board, among others.
For more information on new fund products, visit our new ETFs category.