The Activist Investor That Beat Exxon Is Trying To Reinvent The Index Fund

Engine No. 1, the small activist investment firm that won a total of three seats on ExxonMobil’s board of directors earlier this month, is launching an exchange traded fund that aims to reshape the broad market index fund. Its Engine No. 1 Transform 500 ETF will mimic a broad market index fund at a low cost, while also giving investors a potentially powerful say in corporate governance. At an expense ratio of just five basis points annually, or 0.05%, Engine No. 1 will provide active corporate governance oversight on the constituent companies held in the ETF by a team of investors that just scored one the biggest proxy battle wins ever witnessed in Corporate America. Engine No. 1 promises that like its campaign against Exxon, it will hold companies accountable for their environmental and social impacts through active voting on shareholder issues. The firm’s investment team will also actively monitor boardrooms on their performance on issues like reducing their environmental footprint, and work as active shareholders improve their overall long-term financial performance. In addition to environmental impacts like carbon emissions and climate change, other issues that Engine No. 1 will focus on including gender and racial equity, disclosure surrounding political spending, and the promotion of safe workforces offering fair wages.“It's a broad market cap exposure, but we are driving our value on how we operate as active owners,” Yasmin Dahya Bilger, Head of ETFs at Engine No. 1, tells Forbes. “It gives all investors a chance to take a seat at the table and be part of transforming companies.”The ETF will invest in a market-cap weighted index of the 500 largest U. S. stocks, tracking the Morningstar U. S. Large Cap Select Index. Unlike a passive Vanguard S&P 500 Index fund, investors in the ETF will also get a team of active investors who vote carefully on shareholder issues, set rigorous goals for boardrooms, and have the ability to successfully run change campaigns if necessary.“A lot of what passes for ESG investing in the public markets today is focused on shifting investors' exposure between different sectors or different companies, but not actually changing the underlying companies themselves,” adds Michael O’Leary, a managing director at Engine No. 1. “We decided, what if we focus instead on the impact we can drive, not by what companies we hold or buy, but by what we do as active owners of those companies.”When Engine No. 1 took on Exxon earlier this year, few outsiders gave the small $250 million in assets firm much of a chance. Exxon, after all, is America’s most storied oil and gas driller, and the activists owned less than 1% of stock. It joined a long line of small fry investors who had tried to take on Exxon in shareholder campaigns, but its winning result in electing three directors to Exxon’s board came from a unique approach. Engine No. All data is taken from the source: http://forbes.com Article Link: https://www.forbes.com/sites/antoineg... #engine #newsfortoday #kingworldnews #cnnnewstoday #newstodayfox #bbcnewsworld #