Wealthsimple launches green ETF on the NEO Exchange

Wealthsimple Trade
The green bonds are helping finance solar projects and wind farms.

Wealthsimple listed an exchange-traded fund (ETF) on the NEO Exchange on January 21.

The Wealthsimple North American Green Bond Index ETF seeks to replicate the performance of the Solactive Green Bond USD CAD DM CAD hedged Index, which invests primarily in investment-grade green, social, and sustainable bonds.

“We are increasingly re-evaluating our existing investment products to find ways to improve the availability of ESG [environmental, social, and corporate governance]-investing options available to our clients,” said Ben Reeves, chief investment officer, Wealthsimple.

The startup has dubbed its latest product the Wealthsimple Green Bond ETF.

“We view it as our responsibility to help provide the capital needed for the transition to a low carbon economy while getting our clients good investment outcomes,” Reeves said. “We see this newest ETF as an opportunity to make impact investing through green bonds more accessible to all Canadians.”

ETFs are bundles of securities traded on exchanges, just like stocks. A Green Bond ETF is a collection of green bonds that trade on a stock exchange.

Whereas most bonds tend to finance projects such as factories, green bonds encourage sustainable or environmental efforts such as wind power projects.

The Wealthsimple ETF currently supports solar projects in Virginia, wind farms in Denmark, and light rail in Ontario.

The new ETF fits into Wealthsimple’s socially conscious portfolio, where it advocates for clean, green, sustainable, and diverse investments. On its website the startup encourages people to invest in a “better world,” and to “invest according to your values.” Early on, Wealthsimple launched responsible investment portfolios targeting millennials, allowing users to invest in companies that boast low carbon emissions, advance cleantech innovation, and promote sustainable growth in emerging markets.

All bond issues under the new ETF must be verified by the Climate Bond Initiative, which Wealthsimple referred to as a “well-respected, not-for-profit authority on green bonds. The Climate Bond Initiative ensures the funds from the bonds are being used in pursuit of a net-zero carbon economy.

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The green ETF is Wealthsimple’s second ETF on the NEO Exchange. The startup launched an ETF in May 2021 to offer investors access to a diversified index of Shariah-compliant stocks. It was part of Weathsimple’s push to offer more Halal financial products.

Overall, the FinTech company offers a variety of innovative investment options. It launched a new cryptocurrency investment product in 2021 that allows for crypto investments through its group retirement fund product. Wealthsimple claims to be the first-ever group retirement fund in Canada that allows people to invest in crypto.

Earlier that year, the startup also rolled out fractional shares to make buying and selling large stocks more accessible for new investors. Again, it claimed it is the only trading platform in Canada to offer fractional shares in Canadian and United States companies.

Wealthsimple said the investment option aims to give more Canadian investors the chance to buy and sell portions of some of the market’s most highly-valued stocks.

In late 2021, the FinTech company also announced a pricing change to its Trade service in order to simplify US trades. The Toronto-based startup announced the launch of a Plus tier at $10 per month. Wealthsimple will onboard interested current Trade customers via a waitlist.

Wealthsimple raised a $750 million CAD financing round in 2021 in order to expand its market position and continue to build out its product suite.

The startup claimed the deal brought Wealthsimple’s post-money valuation to $5 billion CAD.

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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