By Trevor Hunnicutt and Jonathan Stempel
NEW YORK (Reuters) - A new exchange-traded fund is being introduced for investors who want their money kept far away from sexual harassment in the workplace.
The Impact Shares YWCA Women's Empowerment ETF is expected to launch in the first quarter of 2018, and enable people to invest with companies that promote women's interests and take strong stands against workplace harassment.
"When women thrive, whole economies thrive," said Dorri McWhorter, chief executive of YWCA Metropolitan Chicago.
Wall Street is championing companies that perform well on environmental, social and governance (ESG) criteria to appeal to younger investors, as well as universities and other institutions interested in socially responsible investing.
U.S. managers employing such strategies invest more than $8 trillion, according to the nonprofit Forum for Sustainable and Responsible Investment.
The nonprofit Impact Shares Corp will oversee the YWCA fund, whose ticker will be "WOMN." It is also creating a fund to invest in companies that promote interests of minorities, the NAACP Minority Empowerment ETF.
"Aligning capital with these nonprofits is the best way to capture the 'S,' the socially responsible aspect, of ESG," said Ethan Powell, founder of Impact Shares. "I would like to think that these companies are just generally better run and maybe more in touch with modern-day society."
YWCA has championed issues including women's empowerment, civil rights, affordable housing and healthcare for more than 150 years. Sexual harassment has been in the media spotlight after a string of recent complaints against prominent figures in the U.S. media, Hollywood and politics.
The YWCA fund is designed before expenses to track the Equileap North American Women's Empowerment Index, comprising a subset of the 1,000 largest U.S. companies by market value, perhaps 150 to 300 overall, that are "empowering to women."
Inclusion in the index will depend on 18 criteria including policies against sexual harassment, bullying and other forms of violence, and protection of whistleblowers from retaliation.
Other criteria include the number of women in the workforce and upper management, pay and promotion opportunities, and the ability to maintain work-life balances.
An "alarm bell," such as a legal finding of discrimination or multiple lawsuits alleging misconduct, can keep companies out of the index.
The YWCA fund faces a headwind: costs.
According to a draft prospectus, its annual expense ratio is expected to be 0.75 percent.
That compares with 0.22 percent for the $3.7 billion Vanguard FTSE Social Index fund, which uses several screens and recently owned 428 stocks including Apple Inc (O:AAPL) , Microsoft Corp (O:MSFT), Google parent Alphabet Inc (O:GOOGL), Facebook Inc (O:FB), Johnson & Johnson (N:JNJ) and JPMorgan Chase (NYSE:JPM).
But Powell said Impact Shares, based in the Dallas suburb of Frisco, Texas, will donate advisory fees after expenses to the YWCA. It has a similar arrangement with the NAACP.