Amberwave Launches Large-Cap Impact Fund, iUSA | ETF Trends

Amberwave has launched its first ETF, an actively managed impact fund based on the values of jobs, security, and growth (JSG).

The Amberwave Invest USA JSG Fund (iUSA), listed on the NYSE on January 20, is engineered to replace diversified, large-cap equity exposures in investors’ portfolios, according to a spokesperson for the firm.

Through Amberwave’s portfolio construction approach, iUSA is designed to match key macro attributes of broadly diversified portfolios like the S&P 500, while isolating the outperformance associated with strong JSG characteristics, as determined by Amberwave’s proprietary JSG scoring process, according to a spokesperson for the firm.

Amberwave’s portfolio construction approach results in less concentration to individual securities than seen in broader indexes. iUSA’s top 30 holdings each make up more than 1% of the portfolio. 

Strong JSG scorers like Tractor Supply Company will represent a larger weight (0.7%) in iUSA than in the S&P 500 (0.06%). At the time of launch, the largest position is Microsoft, which is a very strong JSG scorer, and its weight in iUSA is approximately 3.9%, which is materially less than its almost 6% weight in the S&P 500, according to a spokesperson for the firm.

Inflation and rising rates are critical considerations for investors in the current environment, and the firm expects strong JSG performers to outperform over time as a result of the underlying strength of their businesses, rather than high valuation multiples that may be more sensitive to interest rate increases due to rising inflation.

“Moreover, inflation is in large part a result of the supply chain crisis unfolding across America — a crisis that individuals and families are feeling every day. Because JSG focuses on investing in and securing supply chains, we expect any JSG portfolio to disproportionately benefit from the actions being taken to address the supply chain crisis, both at the corporate and government levels,” a spokesperson for the firm said.

“With its renewed focus on creating opportunities for workers, strengthening supply chains, and improving American communities, JSG investing is very much a part of the solution to the inflation gripping the country and the associated erosion of real wages,” the spokesperson added.

Investment stewardship is a critical component to Amberwave’s approach to JSG investing. The firm will analyze individual proxy votes under its proxy policy and exercise voting power in order to promote corporate activities that are JSG-friendly. Amberwave intends to be an active voice for its investors by encouraging U.S. companies to focus on the core values of creating U.S. jobs, improving the country’s national security, and generating economic growth throughout their corporate decision-making processes, according to the firm.

Amberwave is led by three former senior U.S. Treasury officials — Dan Katz, Stephen Miran, and Thomas Emanuel Dans — who collectively have decades of combined financial services experience and who helped implement trillions of dollars in JSG policies to protect, preserve, and grow the American economy in the face of the COVID recession.

The actively managed fund carries an expense ratio of 67 basis points. 

Vident serves as the sub-advisor to the fund and will use its trading capabilities to assist Amberwave in executing portfolio trades to minimize costs and maximize iUSA’s tax efficiency for its investors. Amberwave is solely responsible for individual security selection and portfolio construction for iUSA.

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