The AdvisorShares Global Echo ETF (NYSEARCA:GIVE) grabbed my attention when it was first introduced in May of 2012. An interesting fund to say the least, it is a multi-manager, multi-strategy, broadly diversified, actively managed ETF with a focus on sustainable investment themes. The portfolio companies may technologically, socially or environmentally impact the earth positively, with a focus on themes such as economic themes (corporate governance, risk & crisis management, community investment, energy efficiency, food, green building); environmental themes (air, water, earth); technology themes (mobility, renewable energy, technology and access); social themes (human health such as occupational health and safety) and other sustainable themes as defined by the portfolio managers. The fund seeks long-term capital gains through a core growth strategy.
The idea of "sustainable investing" isn't what caught my eye - it was the expense ratio. At a hefty 1.7% (partially to pay for the 4 managers) 0.4% goes to the Global Echo Foundation, co-founded by Philippe Cousteau Jr, grandson of legendary French explorer and author Jacques Cousteau. The charity works on a wide range of social issues including the support of social entrepreneurship and supporting the health and well-being of women and children in communities around the globe. Philippe was doing the interview rounds to promote this unique ETF during its inception.
The 4 sub-portfolios are:
First Affirmative Financial Network: Alternative Long/Short and Hedging Strategies. First Affirmative oversees the management and allocation of the fund's assets to each portfolio management team.
Reynders, McVeigh Capital Management: Core equity strategies (global with a US focus). Long only with a focus on sustainability and concentrated growth. This Boston-based firm focuses on socially progressive investments.
Baldwin Brothers: Core equity strategies (global). Long only with a focus on sustainability.
Community Capital Management: Core fixed income
A look at the current holdings
18% is fixed income with half in 20 year variable bonds, the rest split with 30 year Ginnie Mae mortgage backed securities at 3.25% and 15 year SBA loans at 4.45%.
- 14% SPDR Barclays 1-3 Month T-Bill ETF (NYSEARCA:BIL)
- 3.5% iShares KLD 400 Social Index (NYSEARCA:DSI) - top holdings IBM, JNJ, MSFT, PG, GOOG (all 3-4% each of the fund)
- 2% NOVOZYMES A/S ADR (OTCPK:NVZMY) - This 88-year-old Denmark biotech company offers solutions for the agriculture industry, including enzymes to enhance digestibility and nutritional value of animal feed; microbial solutions to maintain water quality, limit risks of disease, and enhance yields in aquaculture; and microbial-based biofertility, biocontrol, and bioyield enhancer products to naturally produce healthier crops and enhance yields. It also provides a portfolio of enzymes for application in biofuel production; recombinant products and technologies to the medical device and drug delivery market; and food and beverages enzymes for applications.
2% Johnson Controls, Inc. (NYSE:JCI) - Operate in 3 segments: The Building Efficiency segment designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems, as well as building management systems, controls, and security and mechanical equipment. Their Automotive Experience segment designs and manufactures seating systems and components; cockpit systems consisting of instrument panels and clusters, information displays, and body controllers; overhead systems, such as headliners and electronic convenience features; floor consoles; and door systems. The Power Solutions segment produces lead-acid automotive batteries, as well as offers absorbent glass mat and lithium-ion battery technologies for hybrid and electric vehicles.
2% PowerShares Global Clean Energy (NYSEARCA:PBD) - A broadly spread out international green energy fund.
From 1-1.5% are companies such as CSCO, AAPL, PHO, CVS, PZD, GSK
And from less than 1% are companies such as ENOC, AWK, MA, ADP, AMZN, GOOG, JNJ, CREE, ILMN, SSYS, GLW, FSLR, FAN, LIT
Over the year GIVE returned about 10%. Compared to a portfolio equally weighted in DSI, JCI, PBD, and NVZMY the return would be closer to 30%. With those types of additional gains an investor could donate an even larger donation to the same charity by choosing either one or all 4 of the mentioned equities instead of eroding capital with the GIVE ETF. I'd have to pass on this investment as a position in one's portfolio as half of the GIVE portfolio is allocated to risk-averse investments not yielding enough return to make the high expense ratio worthwhile.