People are more concerned about investing in good companies and avoiding those engaged in activities harmful to people and the planet. As shareholders, they can seek long-term growth while doing their part to change the world for the better. CHGX makes that possible.
AXS Change Finance ESG ETF (CHGX) provides environmentally and socially conscious investors diversified equity exposure to US companies that live up to the highest standards of environmental, social and governance (ESG) principles.
Applies 125 comprehensive ESG risk factors to find the most sustainable and responsible US companies out of the 1,000 largest US companies.
Invests equally among the 100 best companies based on their positive impact on land, water, air, biodiversity, social responsibility and a host of other factors. Think of it as an "ESG 100" strategy.
Managed by AXS and Change Finance, PBC, a catalyst for impact- and performance-focused investing and an active advocate for shareholders.
Inception Date: 10/9/2017
Distribution Frequency: Annual
Management Fee: 0.49%
Total Annual Operating Expense: 0.49%
Change Finance, PBC, is an asset manager that builds impact-focused, performance-oriented investment strategies and ETFs. As a Public Benefit Company (PBC), it commits to deliver value to all stakeholders for the future success of our companies, our communities and our country.
Change Finance employs its Isolated ESG Risk-Factor Investment Methodology, a rigorous process that considers 125 environmental, social, and governance (ESG) factors. Each factor is carefully selected to minimize exposure to ESG risks including but not limited to litigation, regulation, and loss of social license. The firm also developed the first-ever Certified Carbon Neutral ETF*. For more, visit change-finance.com.
Change Finance, PBC
CEO & CIO
* Constituent carbon footprint data is provided by the Carbon Disclosure Project. Portfolio-level carbon footprint is equal to the sum of each portfolio constituent scope 1 and scope 2 carbon emissions multiplied by percentage of ownership (position size/market capitalization). Carbon footprint analyses are performed prior to portfolio rebalancing each quarter. EthosESG has completed an independent audit of CHGX's carbon footprint and carbon credits and determined that CHGX is a carbon neutral fund. EthosESG defines carbon neutrality for a fund as reducing more tons of CO2 emissions (for example, through valid carbon storage credits) than the fund creates through the Scope 1 and Scope 2 emissions of its holdings. More information on EthosESG's methodology at https://ethosesg.com/carbon-neutral-certification.
Frequently Asked Questions
What is the fund’s investment objective?
AXS Change Finance ESG ETF seeks to track the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index (CHGX Index). The index was developed and is managed by Change Finance, PBC, the fund’s portfolio manager. It takes the 1,000 largest stocks represented in the Solactive US Large & Mid Cap Index (GTR) and filters them against 125 ESG-related risk factors defined by Change Finance. Approximately 100 large cap and some mid cap companies that meet a diverse set of environmental, social and governance (ESG) standards are selected for the index. The sector weightings in the CHGX Index approximate those of the GTR, and each of the 100 securities are weighted equally. The ETF replicates the CHGX Index by investing in the same securities.
What are the criteria for inclusion in CHGX?
Leaning on its deep expertise and research in corporate sustainability, the Change Finance team established one of the industry’s most comprehensive list of ESG risk factors. Its Isolated ESG Risk-Factor methodology eliminates companies exhibiting unsustainable, irresponsible corporate behavior, including but not limited to the following:
- Environmental: Production & processing of fossil fuels and nuclear energy; GMOs, pesticides, water, emissions of particulates, hazard chemicals, etc.
- Social: Tobacco, military weapons, discrimination, sex trafficking, health & nutrition, etc.
- Governance: Forced labor, labor rights violations, animal welfare, corruption, unethical practices, litigation, etc.
How does CHGX differ from other ESG funds?
CHGX applies far more risk factors than most funds labeled “ESG.” For instance, it places strict limits on exposure to companies involved in fossil fuel reserves, generation and processing, regardless of how they perform against other metrics. The portfolio manager considers unethical practices -- such as involvement in forced labor, corruption, litigation, delivery of healthcare, sex trafficking and more – that have less emphasis in other ESG models. In addition, Change Finance actively engages as a shareholder advocate with companies on sustainability and ethical issues, with the goal of “changing finance” to invest in service to life.
When did CHGX launch?
AXS Change Finance ESG ETF launched on October 9, 2017.
Environmental, Social and Governance (ESG): Environmental criteria considers how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index (CHGX Index): The underlying index for CHGX, it measures the performance of an equal-weighted portfolio of approximately 100 large to mid cap equity securities of U.S.-listed companies that meet a diverse set of ESG standards. Developed in 2017 by Change Finance, PBC.
Solactive US Large & Mid Cap Index (GTR): Intends to track the performance of the large and mid cap segment in the U.S. Constituents are selected and weighted based on free-float market capitalization.
About the Carbon Neutral Certification
Ethos performs an independent analysis of a fund’s carbon footprint and carbon credits (offsets) to verify whether the fund is carbon neutral during a specified period. The carbon footprint consists of verified Scope 1 and Scope 2 emissions of every holding of the fund. Ethos defines the carbon footprint of a fund as the total tons of Scope 1 and Scope 2 CO2 emissions of its holdings multiplied by the fund’s percentage ownership of those holdings. Percentage ownership is based on the market value of the fund’s shares divided by the total market value of the holdings. While Ethos researches and models Scope 3 emissions for every fund holding, the company does not consider Scope 3 for fund-level certification. This is due to limitations with Scope 3 data, including: lack of standardized reporting methodology by companies: low coverage of companies reporting Scope 3 emissions; and, likely overlap of Scope 3 emissions across company value chains. As part of the Carbon Neutral Certification, Ethos requires funds to submit proof of purchase of carbon credits from a list of approved providers of carbon credits. When information is not available the following modeling formula used is: Expected emissions = peer-average carbon intensity (CO2 per $M revenue) * $M revenue. EthosESG audits this estimation and will address discrepancies should they arise. Emissions data is limited by the voluntary disclosure by individual companies and is not independently audited. Change Finance and EthosESG make every effort to ensure data is accurate but cannot guarantee absolute carbon neutrality.
Morningstar Sustainability Rating
Out of 3,510 US Equity Large Cap Blend funds as of 7/31/2023. Data is based on long positions only and based on 100.00% of AUM. Historical Sustainability Score as of 7/31/2023. Sustainability Rating as of 7/31/2023.
Sustainalytics provides company-level analysis used in the calculation of Morningstar’s Historical Sustainability Score. The Morningstar Sustainability Rating is a measure of how well the portfolio holdings are managing their ESG Risk relative to the portfolio’s Global Category peer group.
The Morningstar Historical Sustainability Score is a weighted average of the trailing 12 months of Morningstar Portfolio Sustainability Scores. Historical portfolio scores are not equal-weighted; rather, more-recent portfolios are weighted more heavily than older portfolios. Based on their Morningstar Historical Sustainability Score, funds are assigned absolute category and percent ranks within their Morningstar Global Categories. A fund’s Morningstar Sustainability Rating (Globe Rating) is its normally distributed ordinal score and descriptive rank relative to the fund’s global category. Higher ratings are better and indicate that a fund has, on average, more of its assets invested in companies that have lower ESG risk as characterized by Sustainalytics.
Important Risk Information
There is no guarantee the sectors or asset classes the advisor identifies will benefit from inflation. Fund may invest a larger portion of its assets in one or more sectors than many other funds, and thus will be more susceptible to negative events affecting those sectors.
Market and Equity Risk: The value and market price of an equity security may decline due to general market conditions that may or may not be specifically related to a particular company or industry.
Passive investment risk: The Fund invests in securities included in the Index regardless of investment merit. It is not actively managed and generally will not attempt to take defensive positions in declining markets.
ESG Investing Risk: The Fund’s ESG policy could cause it to make or avoid investments that could result in the portfolio underperforming similar funds that do not have such policies.
Market Cap Risks: Companies with larger capitalization may be unable to attain the high growth rates of successful, smaller companies during periods of economic expansion. The securities of mid-capitalization companies may be subject to more abrupt or erratic market movements and may have lower trading volumes or more erratic trading than securities of larger, more established companies.
Real Estate Risk: Investments in Real Estate Investment Trusts (REITs) involve risks such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns. NAVs are calculated using prices as of 4:00 PM Eastern Time. The closing price is the midpoint between the bid and ask price as of the close of exchange. Closing price returns do not represent the returns you would receive if you traded shares at other times.