VOTE is a first of its kind, sustainability-focused ETF, which will differentiate exclusively on how it plans to actively engage with the large cap US companies it holds via shareholder proposals and proxy voting. Engine No. 1, an activist hedge fund that focuses on sustainable investing issues, is the creator and manager of VOTE.
Engine No. 1 made headlines in early June, 2021, by successfully installing three directors on Exxon’s board with the goal of pushing the company to reduce its carbon footprint.
VOTE likely becomes the most direct path for Betterment clients seeking a meaningful impact on sustainable investing. Engine No. 1 will provide incremental updates on their shareholder campaigns and look for feedback from individual investors on what issues resonate with them to guide their shareholder engagement strategy.
VOTE is designed to track the Morningstar US Large Cap Select index, which is virtually the same as the S&P 500. At a 0.05% annual expense ratio, VOTE is markedly less expensive than other ESG-themed ETFs.
How will VOTE be introduced to the SRI Portfolios?
A new target allocation to VOTE will be introduced in all three of the current SRI strategies (Broad Impact, Climate Impact and Social Impact). Goals using the Legacy SRI strategy will not be updated to include an allocation to VOTE.
Given the current liquidity of VOTE and our independent assessment of total trading costs, we have decided to initially allocate 10% of our current U.S. Equity exposure in each of our current SRI portfolios to VOTE (Broad Impact, Climate Impact and Social Impact).
No action is needed for users in the current SRI portfolio strategies, the ETF will be added to your portfolio(s) through Betterment’s automatic rebalancing feature. New deposits and dividends may be used to purchase shares of VOTE and your portfolio(s) could purchase shares of VOTE during your portfolio(s) next rebalance that would have occurred regardless of the addition of VOTE. Portfolio drift will not increase due to the introduction of VOTE into your portfolio(s). Our automatic rebalancing feature will always seek to avoid the realization of short-term capital gains when possible but may sell positions that are at a long-term capital gain, although it will prioritize selling shares that are at a loss first.