Ethical Performance
inside intelligence for responsible business


SRI adopted by exchange traded funds

March 2005

SRI is moving into the world of exchange traded funds.

Two new such funds, which take the form of an investment company holding securities of companies in a selected market index, have been set up separately in the US by Barclays Global Investors and PowerShares Capital Management.

Barclays began trading its iShares KLD Select Social Index Fund at the end of January, and PowerShares Capital Management opened its PowerShares WilderHill Clean Energy Portfolio late last month.

The Barclays fund is targeted at both institutional and individual investors and tracks the KLD Select Social Index. This comprises around 350 companies judged by Boston-based KLD Research & Analytics to be the best social and environmental performers in the Russell 1000 and S&P 500. The fund weights each company according to its social and environmental performance, allowing investors to have a position in all sectors, with the single exception of tobacco.

The investment universe of the PowerShares WilderHill fund is smaller, consisting of the 37 US-listed companies in the WilderHill Clean Energy Index, which tracks businesses generating energy from wind, solar power, hydrogen fuel cells and similar sources.

FTSE says a number of pooled funds invest in the stocks of the constituents of its FTSE4Good ethical index family, but none of these are exchange traded funds, which are specific investment vehicles that make it possible for an investor to hold a diversified portfolio through a single security.

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