Morgan Stanley Launches Six New ESG-Focused ETFs

The ETF lineup of Morgan Stanley & Calvert’s new suite

Morgan Stanley & Calvert's new suite of ESG-focused ETFs span six offerings, which include:

• Calvert US Large-Cap Diversity, Equity, and Inclusion Index ETF (CDEI)
• Calvert Ultra-Short Investment Grade ETF (CVSB)
• Calvert US Large-Cap Core Responsible Index ETF (CVLC)
• Calvert International Responsible Index ETF (CVIE)
• Calvert US-Mid Cap Core Responsible Index ETF (CVMC)
• Calvert US Select Equity ETF (CVSE)

All of the ETF's are attractively and competitively priced, with expense ratios ranging from 0.14% for index ETFs like CDEI to 0.29% for actively managed ETFs like CVSE. 

All six ETFs target equity or fixed-income holdings from companies that align with Calvert's "Principles for Responsible Investment" framework, which sets out a series of principles aligned with each pillar of the ESG trifecta. By applying these principles, Calvert's framework excludes companies that:

• Manage environmental risks poorly or contribute to environmental problems.
• Employ forced and/or child labour. 
• Violate human rights and those of indigenous peoples. 
• Manufacture tobacco products, alcoholic beverages, and firearms without taking steps to reduce their harmful impact.
• Manufacture civilian firearms and military weapons and use animals for product testing. 

How to use these ETFs

The current lineup of Morgan Stanley / Calvert ESG ETFs provides aspiring ESG investors with numerous options when it comes to constructing a globally diversified, ESG-conscious portfolio. Investors can now slice-and-dice to their liking as opposed to relying on a single one-size-fits-all ETF. 

For example, by combining CVLC, CDEI, CVMC, and CVIE, investors can create an ESG-oriented portfolio that is diversified across U.S. large and mid-caps, along with international broad-market exposure. Investors also gain access to Calvert's ESG methodology, which has a history dating back to 1982. 

Adding CVSB would also give actively managed fixed income exposure with minimal exposure to interest rate risk. For the chance to outperform, CVSE grants access to actively managed strategies, which is fairly rare in the ESG space given that the majority of ETFs tend to be passive index based. 

Finally, it's worth noting that Morgan Stanley Investment Management is also putting its money where its mouth is. The firm has committed to making an annual donation to DEI initiatives and organizations amounting to 0.02% of CDEI's net annualized assets under management, or AUM. 

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.