ETF of the Week: Paul Tudor Jones' Goldman Sachs 'JUST' ETF

ETF Trends publisher Tom Lydon discussed the Goldman Sachs JUST U.S. Large Cap Equity ETF (JUSTon this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.

Overview: Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST)

  • A new take on socially responsible investing
    • Based on Paul Tudor Jones ranking
    • Billionaire investor, hedge fund tycoon Paul Tudor Jones, best known as the founder of Tudor Investment Corp.
    • the ETF is based off Just Capital, Jones’ nonprofit foundation, to find large us companies engaging in “just business behavior”
  • Just Capital
    • JUST Capital has surveyed 72,000 Americans to understand the business practices related to environmental, social and governance (ESG) issues that matter most to them.
    • Using those priorities, it scores Russell 1000 companies on 85 ESG metrics like fair pay, job creation, customer privacy and environmental impact.
    • To earn a spot, firms must perform above average within their industry on theESG metrics.
  • Investing with a cause, without sacrificing returns
    • Over the last year and a half, the JULCD Index has beaten the Russell 1000 by 3.6 percentage points.
    • And new research conducted by JUST Capital from 2016 through 2017
      • top 20% of JUST-ranked companies showed 14% higher annualized returns and 7% lower volatility compared with the bottom 20%
    • other longer-running funds have also shown that ESG strategies can produce outsize returns.
      • Parnassus Endeavor, a $5 billion ESG fund focused on worker treatment, has returned 14% over the past 10 years, compared with 9% for the S&P 500.
      • Brown Advisory’s Sustainable Growth fund, which aims to find companies who have sustainability at the center of the business strategy, has returned 18% over the past five years compared with 14% for the S&P 500.
  • Goldman Sachs JUST U.S. Large Cap Equity ETF
    • The launch of JUST has also been one of the largest opening days for an ESG-related ETF.
      • JUST has accumulated an AUM of $251 million since its launch.
    • The ETF specifically promotes corporate practices and policies that society values
    • allows investment to flow toward a more sustainable and equitable future, while seeking to generate attractive returns for investors
    • The indexing methodology hopes to capitalize on the fact that companies found in the socially responsible index historically pay better, create more jobs, pay fewer fines, give twice as much to charity, emit less greenhouse gas, and have higher return on equity, compared with the rest of the Russell 1000.
    • Top sectors: information tech 26.7%, financials 15.0%, consumer discretionary 13.0%, health care 12.8%, industrials 10%
    • Top holdings: Apple 4.2%, Amazon 4.0%, Microsoft 3.3%, JP Morgan Chase 2.1%, Facebook 2.0%, Exxon Mobil 1.7%, Johnson & Johnson 1.6%, Bank of America 1.6%, and Google’s Alphabet 1.5%.

For more podcast episodes featuring Tom Lydon, visit our podcast category.