The Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST) just had the biggest-ever launch for a socially responsible ETF. On Wednesday, its first day of trading, JUST took in $250 million in net inflows. Meaning that, after just one day of trading, the fund is already the ninth-largest socially responsible ETF. Most of these flows are likely from "BYOA" money from Goldman Sachs Asset Management, and effectively function as the ETF's starting seed capital, says Dave Nadig, managing director of ETF.com. "Increasingly, new ideas only come to market if issuers bring interested clients along with them," he said. "The days of a $2.5 million launch scraping for assets are a bit behind us." JUST is Goldman's first environmental, social and governance (ESG) ETF, though not its first ESG product or strategy; the firm currently manages about $85 billion in ESG-related assets (see: "Goldman's New ETF Take On ESG"). JUST Undercuts DSI, SUSA JUST launched with an expense ratio of 0.20%, placing it well below the average expense ratio of socially responsible ETFs, which is currently 0.44%. That price tag also undercuts the biggest ESG ETFs, the iShares MSCI KLD 400 Social ETF (DSI) and the iShares MSCI U.S.A. ESG Select ETF (SUSA), by 5 basis points apiece. Offering exotic strategies at vanilla prices is a tried-and-true strategy for Goldman Sachs. For example, in 2015, the issuer made waves when it debuted its Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC), a smart-beta U.S. equity ETF, with the same expense ratio as the SPDR S&P 500 ETF Trust (SPY). GSLC now has $3.45 billion in assets and is the firm's largest ETF. Different Model Of ESG JUST also has significant star power behind it. The index is developed and maintained by JUST Capital, a nonprofit started by former hedge fund manager Paul Tudor Jones, and which counts celebrity wellness guru Deepak Chopra and media mogul Ariana Huffington among its board members. JUST Capital was founded "to build a more just marketplace that better reflects the true priorities of the American people," according to the foundation's website. To do this, the nonprofit conducts polls and surveys of the American public to measure what "just business behavior" practices matter most to them. The resultant priorities—which range from fair worker pay and workplace safety to lower greenhouse gas emissions to strong consumer privacy protections—inform the selection criteria and methodology for JUST's benchmark. Each year, JUST evaluates and ranks stocks in the Russell 1000 according to that year's list of priorities. The top 50% of companies in each sector are then included in the benchmark. The result is a diversified, sector-neutral benchmark of large-cap companies. How Does One Define ‘Just’? Unlike other ESG ETFs, whose methodology remains static, JUST's selection criteria can and likely will change from year to year, as investor opinion on "just" business practices evolves. Despite its unique methodology, however, JUST appears to suffer the same existential problem as many other ESG ETFs: How does one quantify "good" corporate behavior in a meaningful way? JUST's portfolio includes several companies experiencing high-profile scandals that would seem to run counter to the "just business behavior" priorities of the fund. Both Facebook and Amazon are among the fund’s top holdings. The former has been the subject of congressional hearings due to data breaches and privacy violations, while the latter has come under increasing fire for a variety of reasons, including how it treats and pays its employees. As of June 14, JUST had 435 companies in its portfolio, with an average market cap of $234 billion. Contact Lara Crigger at [email protected]
Goldman’s Sachs’ JUST US Large Cap Equity ETF, developed and maintained by Paul Tudor Jones’ JUST Capital non-profit, experienced the largest-ever launch for a socially responsible ETF, taking $250m on one day of trading. This made it the ninth-largest socially responsible existing ETF. The majority of the inflows are likely to have come from “BYOB” assets from Goldman Sachs Asset Management, functioning as the ETF’s starting seed capital. Although Goldman Sachs manages around $85bn in ESG-related assets, JUST is the firm’s first ESG ETF.