The ETF Show - ESG & Innovation
- 05 mins 15 secs
Chad Miller, CFA®, Senior Portfolio Manager at Thrivent Asset Management discusses small-mid cap ESG ETFs. Michael Oh, CFA®, Portfolio Manager at Matthews Asia, also weighs in on structural trends and innovations in Asia.Channel: ETF
Jenna Dagenhart: Hello, and welcome to The ETF Show. Joining me today is Chad Miller, senior portfolio manager for Thrivent Asset Management. Thrivent recently launched a small mid-cap ESG ETF. Can you describe the product?
Chad Miller: Yeah. So at Thrivent, we've been managing our clients' money for over 50 years now. And our mission is to provide our clients with financial clarity, so that they can live lives of meaning and gratitude. And with that mission in mind, we saw an opportunity to launch a product in the marketplace that combines three of the most attractive areas within asset management today. The first being the small and mid-size companies. We look back over the past 30 years, small and mid-size companies have been the top performing publicly traded asset class, returning approximately 11% per year. The second is ESG. We've seen tremendous demand from investors for products that combined ESG into their investment process. And then finally is the ETF structure, so allowing us to offer this to our clients with lower fees and lower taxes. And so combining those three elements, we're really excited to launch this new product in the market.
Jenna Dagenhart: Can you discuss the unique process which Thrivent used to create your new product?
Chad Miller: Yeah. So first, we start with our successful fundamental analysis that we've used in the equity division for some time now with good success. And to that, we layer in our proprietary ESG process. A couple of the important points there are our stakeholder analysis where we focus on if companies can sustainably and successfully serve their primary stakeholders, primary stakeholders being the environment, employees, their customers, suppliers, communities, and then corporate governance over the top. The next area we focus on is financial materiality. So we're trying to key in on we what we believe are the top two to three or so financially material topics. And then after that, we conduct engagement with the companies to understand where they're headed over the next three to five years.
Jenna Dagenhart: Well, Chad, if somebody wants to find it, what is the ticker?
Chad Miller: Yeah. The ticker is TSME, and the website is thriventetfs.com.
Jenna Dagenhart: Thank you for joining us today.
Chad Miller: Thank you for having us.
Jenna Dagenhart: And now to my colleague, Jenna Dagenhart.
Jenna Dagenhart: Joining us now to talk about the Matthews Asia Innovators Active ETF, ticker MINV, and the investment strategy behind it is Michael Oh, portfolio manager at Matthews Asia.
Michael Oh: Today, Asia accounts for about 50% of global GDP and home to more than 60% of global population. And Asia also happens to be one of the most dynamic and fastest growing regions in the world today. In this dynamic region, we are investing in companies that are benefiting from two big structural trends that we are seeing on the ground: number one, a rising disposable income, and number two, a massive and still growing middle class. Asia's purchasing power is huge. Asia has become the biggest market in the world for many innovative products such as electronic cars, semiconductors, healthcare, and many other high value-added products.
And the growth is far from over. By 2030, Asian market is expected to be bigger than the US and European markets combined. And that's creating a lot of growth opportunities for many innovative companies in the region. Not only that, Asian companies are also leading innovations in many new growth industries such as automation, new mobility, and green energy. The strategy is well-positioned to take advantage of these new growth opportunities. Lastly, we believe in high conviction, concentrated portfolio. We aim to invest in roughly 30 to 50 most innovative and best growth companies in Asia.
Jenna Dagenhart: So why is innovation especially important when investing in Asia?
Michael Oh: I believe that economic growth drivers are changing in Asia. In the last 20 years, the main growth drivers have been very simple: labor and capital inputs. During that time, a lot of opportunities were created in more basic industries like commodities, steels, chemicals, and everyday products like toothpaste, shampoo, among other things. However, as income in the region reached around $8,000 to $10,000 income level, which I see as a major inflection point, we are beginning to see a shift in the economy where we are seeing different kind of opportunities being formed in more sophisticated industries such as automation, entertainment, healthcare, industries that are more services-oriented. And these opportunities emerging from these trends, they tend to last anywhere between three to five years, sometimes even 20 years, and providing great long-term investment opportunities.
Jenna Dagenhart: And that wraps it up for The ETF show. Thanks for watching and we'll see you soon. I'm Jenna Dagenhart with Asset TV.