Barclays Global Investors is planning to develop and introduce an iShares Genocide-Free ETF, offering an alternative to investors who are uneasy about holding securities of companies associated with genocide. According to a press release, the company plans to partner with an index provider to identify and screen out companies around the world that they believe are strongly connected to genocide. “We believe there is investor interest in genocide-free investing and that belief was reinforced through recent conversations with Investors Against Genocide, among others,” said Noel Archard, head of iShares product research and development. “As a result, we intend to develop an extension of our iShares socially responsible ETF offering with an iShares genocide-free ETF.”
While the details of the Genocide-Free ETF are yet to be determined, it seems likely a central component would be avoiding companies that are either directly or indirectly linked to the human rights abuses in Darfur. According to Investors Against Genocide, four major oil companies, including PetroChina (PTR) (China), Sinopec (SHI) (China), ONGC (India), and Petronas (PNAGF.PK) (Malaysia) are partnering with the government of Sudan, which is accused of using the majority of its oil revenues to fund the genocide. PetroChina and Sinopec are components of many China ETFs and Emerging Markets ETFs, while ONGC is a core holding of several India ETFs and Petronas is included in the MSCI Malaysia Index Fund (EWM).
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iShares currently offers two socially-responsible ETFs, including:
- iShares KLD Select Social Index Fund (KLD): KLD seeks to mimic the performance of the KLD Select Social Index, which maximizes exposure to positive environmental, social, and governance factors while exhibiting risk and return characteristics similar to the S&P 500. This ETF’s largest holdings are Microsoft (MSFT) (2.9%), Johnson & Johnson (JNJ) (2.3%), and Procter & Gamble (PG) (2.1%).
- iShares KLD 400 Social Index Fund (DSI): This ETF tracks the Domini 400 Social (SM) Index, which is similar to KLD in that it seeks exposure to companies deemed to have positive environmental, social, and governance factors. DSI’s largest holdings are Microsoft (5.2%), Procter & Gamble (3.6%), and Johnson & Johnson (3.4%).
Disclosure: No positions at time of writing.