NETZ vs VOTE: Comparing Sustainable Investment Funds

Are you considering investing in companies that are working towards a cleaner, more sustainable future? If so, you may be interested in Engine No. 1’s Transform Climate ETF (NETZ) and Transform 500 ETF (VOTE).

NETZ invests in companies that will benefit from and drive the shift to clean energy, while VOTE aims to use the power of shareholder activism to drive positive change in the largest US public companies.

In this blog post, we’ll compare these two investment funds and help you determine which one may be best for your individual investment objectives. We’ll also discuss the key differences between the two funds, including their cost, stock selection approach, and level of shareholder activism.

Engine No. 1 Transform Climate ETF (Symbol: NETZ)

The NETZ fund is an actively managed ETF invests in companies that will benefit from and drive the shift to clean energy. The fund focuses on companies in industries like transportation, energy, and agriculture that are working towards achieving net-zero carbon emissions. The NETZ fund carries a total expense ratio of 0.75% and a dividend yield of 0.67% at the time of writing.

The current portfolio of NETZ includes top holdings such as Republic Services and Waste Management, as well as Union Pacific and Deere. But it also includes some holdings of stocks listed outside the US.

Engine No. 1 Transform 500 ETF (Symbol: VOTE)

The Engine No. 1 Transform 500 ETF (VOTE) is an index ETF that aims to use the power of investors to drive positive change in the largest US public companies. The fund invests in a diversified portfolio of 500 of the largest US public stocks, roughly matching the S&P 500 Index. Although the VOTE ETF may hold the same companies in similar pro-portions as other S&P 500 Index funds, the difference of VOTE is the use shareholder activism to drive positive environmental change.

Unlike other investment funds that may avoid investing in companies that need to change, VOTE works to transform them. The fund’s strategy focuses on holding companies and their leaders accountable for sustainability issues that create value, actively working with them to drive better performance and engaging with investors to build a platform that serves their long-term interests.

VOTE carries a very low expense ratio of 0.05% which compares favourably to other S&P 500 index funds.

NETZ & VOTE Comparison:

	NETZ	VOTE
Cost	0.75%	0.05%
Stock Selection	Active	Passive
ESG Activist	N/A	Yes
Yield	0.67%	1.50%

Which investment is best?

To decide which investment may be best, its important to pay attention to an investor’s individual objectives. If we agree that passive index funds will outperform their actively managed peers 80% of the time, then VOTE is superior. The VOTE ETF also costs less and carries a higher yield.

If an investor believes that Engine No. 1 will be successful using shareholder activism to change the course of the companies they lobby, then VOTE is a better investment.

But, if an investor can’t stomach owning share of companies currently engaged in unsustainable practices and believes that using negative screens to exclude these industries and companies from a portfolio is a better approach to ESG investing, then NETZ provides a portfolio that matches that viewpoint.

Both investments provide high liquidity and transparency with relatively low fees.

An investor who is particularly interested in investing in companies that are working towards net-zero carbon emissions may prefer NETZ, as it actively seeks out and invests in such companies. The fund carries a higher expense ratio but offers exposure to companies that are focused on environmental sustainability.

An investor who is interested in shareholder activism may prefer VOTE, as the fund’s strategy focuses on holding companies accountable for sustainability issues and working with them to drive better performance. VOTE engages with investors and builds a platform that serves their long-term interests, making it a suitable option for investors who want to be more actively involved in the companies they invest in.

Engine No. 1

Investing with a focus on sustainability and positive impact has become increasingly important for many investors, and Engine No. 1’s investment offerings provide an opportunity to align your investments with your values. Whether you prefer an active or passive investment approach, there are options available to support companies that are making progress in the areas of environmental and social responsibility.