Etho Capital Funds

    139

    Funds Group: Etho Capital Funds

    Management Company: ETF Managers Group LLC

    Funds Affected: Etho Climate Leadership U.S. ETF’s

    Principal Sustainable Investment Management Strategy: Thematic Investing, Exclusions

    Summary:  

    The index fund tracks the performance of the equity securities of a diversified set of U.S. companies that are leaders in their industry with respect to their carbon impact. “Carbon impact” is calculated based on the total greenhouse gas (“GHG”) emissions from a company’s operations, fuel use, supply chain and business activities, divided by the company’s market capitalization.  Primarily included are companies with a carbon impact at least 50% better (i.e., lower) than the average carbon impact for a given company’s industry (Carbon Leaders). Generally excluded from consideration are companies in industries or sub-industries or specific companies that are broadly associated with negative environmental, social, or corporate governance (“ESG”) profiles, as described below. The aim is to identify a diverse portfolio of companies with a carbon impact at least 50% better than commonly used broad-based securities indices.

    The carbon impact of each such company and its industry average is calculated based on data provided by Trucost Plc. The universe of U.S.-listed companies is then screened to include only companies that are Carbon Leaders.

    The universe of eligible companies is further screened to generally exclude (i) all companies in the energy sector, (ii) all companies in the tobacco, aerospace and defense industries, and (iii) all companies in the gambling, gold and silver sub-industries.  Additionally, excluded are certain companies generally considered by certain non-governmental organizations (“NGOs”) as having a negative environmental sustainability impact (e.g., due to deforestation activities) and includes certain companies identified whose products produce sufficient downstream sustainability benefits to outweigh the companies’ exclusion based on the above criteria (e.g., solar panel manufacturers).