Rize ETF, the specialist thematic exchange traded fund (ETF) issuer, has issued two new ETFs: The Rize Sustainable Future of Food UCITS ETF (FOOD) and the Rize Education Tech and Digital Learning UCITS ETF (LERN).
Both are trading on the London Stock Exchange (LSE) and are also tradeable on the Deutsche Börse in Frankfurt and the Borsa Italiana in Milan.
FOOD has been developed with Tematica Research, the US thematic equity research firm following the firm’s analysis and study into the global sustainable food ecosystem. The premise of the fund lies in the global challenge of providing healthy, affordable and nutritious food to a growing global population, while at the same time reducing harm to the environment.
The investment strategy offers investors exposure to companies that are innovating across the food value chain to build a more sustainable, secure and fair food system for the planet. The ETF replicates the Foxberry Tematica Research Sustainable Future of Food Index and consists of 44 stocks across developed and emerging markets. The ETF is priced at 0.45% per annum.
Stuart Forbes, co-founder of Rize ETF said: “The security and sustainability of our food system is one of the world’s most pressing challenges. The good news is that the food industry has begun to respond. We see expanding plant-based protein options, new technologies penetrating farming, aquaculture and supply-chains and changes in the packaging used to wrap our food, among many other things. On the consumption side, we are witnessing a groundswell in consumer consciousness around what they’re putting inside their bodies and how that impacts the planet’s natural ecosystems. As the food system revolutionises, we wanted to build an ETF that could capture the tailwinds arising from the wide array of supply side and demand side catalysts in the food sector.”
Chris Versace, chief investment officer of Tematica Research said: “None of us want to see the sort of things that await us if we fail to invest in the companies that are working to make our food system more sustainable – a loss of biodiversity, freshwater depletion, pollution of our rivers and oceans and enduring damage to our soils, to name just a few. For us, while the thematic universe in sustainable food was vast, using our thematic lens, we distilled the universe down into nine different subsectors that we believed captured the opportunity in the most compelling and powerful way. We then broke these subsectors down further into the companies that we were able to ascertain best embodied the theme.”
LERN provides investors with exposure to companies that are redefining how education is accessed, resourced and consumed around the world to deliver positive results for the individual and society.
The ETF has been developed in collaboration with HolonIQ, the global education market intelligence firm leverages their proprietary classification system of companies that are market leaders in digital and lifelong learning technologies.
According to HolonIQ, expenditure on education and training from governments, parents, individuals and corporates continues to grow to historic levels and is expected to reach USD$10T by 2030. The Education Technology or “EdTech” sector, specifically, is expected to reach USD$404B by 2025, representing a 16.3% Compound Annual Growth Rate (CAGR) between 2019-2025. That is a USD $63B upgrade to the company’s pre-COVID estimates.
LERN replicates the Foxberry HolonIQ Education Tech & Digital Learning Index and consists of 35 stocks across developed and emerging markets. The ETF is priced at 0.45% per annum.
Rahul Bhushan, co-founder of Rize ETF said: “Technology has the potential to tackle major challenges faced by the education sector. From promoting accessibility and inclusion, to empowering institutions and teachers, to supporting excellent student learning and outcomes, digital learning technologies can help elevate the education sector into the 21st century.
“In a sense, with the automation of jobs occurring across multiple industries, LERN is the antithesis to the robotics funds, because a huge number of people will need to re-skill as they are replaced by automation in the years to come. We must build an education system that is no longer confined to the classroom, which is inclusive and which transforms all learners into lifelong learners. Gone are the days of an academic degree setting you up for life. Today, reskilling and upskilling are vital, and advanced technologies such as gamification, virtual and augmented reality, and personalised and adaptive learning allow education to be tailored to people’s needs as they move through their lifecycles.”
Patrick Brothers, co-CEO at HolonIQ said: “The surge in EdTech spending brought on by covid-19 is expected to re-calibrate to a longer-term integration of digital technologies, and transition to much higher adoption of online education over the coming years. Part of this transition includes significant ‘infrastructure catch-up’ required for managing learning, data and administration as most schools and colleges are still at the very start of a long digital maturity journey. In addition to EdTech’s primary role supporting the formal education sector, B2C EdTech models are now on the rise as students, parents and workers increasingly seek learning support and upskilling for supplemental and/or more direct academic and career outcomes.”
The bond fund is at the lower end of the risk/return spectrum rated as 3/7 (based on simulated past performance data).It is made up of corporate, social and green bonds and UK gilts and an investment can be made without or within a Triodos Stocks & Shares ISA. The fund opens for pre-launch subscriptions on 24 September, at the price of £20 per share.
The Fund will include bonds from companies that are helping to lead the way in terms of environmental stewardship, social responsibility, ethics and governance. For example, those that are engaging with their employees and customers and are employing strategies to reduce energy, water and waste usage or have adopted meaningful social inclusion programmes or are excelling as role models in workplace equality.
William de Vries, director of Impact Equities & Bonds at Triodos Investment Management, said: “We wanted to design a product for the UK market that could offer impactful investments, but at a lower risk for those looking to diversify their portfolio or to start investing for impact. The fixed income bond market is huge, and we know there is great potential for helping to scale the impact investment industry by offering bonds. Our highly experienced team of fund managers and analysts believe that fixed income investing, when done consciously and with purpose, can have meaningful positive impact on society and help to support sustainable solutions for today’s global challenges.”
Gareth Griffiths, head of retail banking at Triodos Bank UK, said: “We anticipate that the fund will be well received by British investors, given the growing interest in impact investing and its continued success in these difficult times. Diversifying our UK portfolio is an important step for us as we look to provide a range of options to complement the different risk appetites of impact investors, who are looking to make holistic decisions by protecting the environment and promoting quality of life for all, while generating a financial return. We’re proud to be leading the way in the UK with these quality funds and hope they encourage more people to consider investing for impact and for our future.”
Jason Hollands, managing director, business development and communications at Tilney Investment Management said: “There’s clearly growing interest in ESG at the moment. In fact this has been one of the most active areas for new fund launches over the last couple of years. Impact investing is a subset of ESG that take things a degree further by not just screening securities to weed out those with poor ESG criteria and target those that score well, but by proactively targeting investments where there is a measurable, positive, benefit to society.
“Tridos has carved out a strong presence in this particular market niche and this product might appeal to investors with a particularly strong desire to see their savings ‘make a difference’. However, it is also important to point out that alongside investing in corporate bonds, the fund will also invest in UK gilts – bonds issued by the UK Government. In fact the existing Tridos Euro Bond Fund is 39% invested in Government bonds. While some of these are regarded as green bonds, likely used to finance things like infrastructure and renewable energy projects, 26% of that fund is in regular government bonds. However, overall this is going to be a fund that will still put a lot of capital to work financing activities that should benefit society.”
Further reading: Impact investing and the effect coronavirus is having