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FUND COMMENTARY

Thrivent Small-Mid Cap ESG ETF Manager Q&A: ESG Analysis

By Chad Miller, CFA, Senior Portfolio Manager | 12/20/2022

12/20/2022

 

Portfolio manager Chad Miller, CFA, takes a deeper dive into the ESG aspects of Thrivent Small-Mid Cap ESG ETF.

Chad Miller, CFA
Senior Portfolio Manager

Related content:

Putting the pieces together of a small-cap/mid-cap ESG ETF


Get the latest on Thrivent’s ETF


This ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example:

  • You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information.
  • The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders.
  • These additional risks may be even greater in bad or uncertain market conditions.
  • The ETF will publish on its website each day a “Proxy Portfolio” designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the ETF’s actual portfolio.

The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information regarding the unique attributes and risks of the ETF, see the Principal Risks section of the prospectus.

Additional risks associated with the fund: The ETF is newly formed and does not have any operating history. Small and medium-sized companies often have greater price volatility, lower trading volume, and less liquidity than larger, more established companies. The ETF’s value is influenced by a number of factors, including the performance of the broader market, and risks specific to the Fund’s asset classes, investment styles, and issuers. Markets may also be impacted by domestic or global events, including public health threats, terrorism, natural disasters or similar events. ESG strategies may result in investment returns that may be lower than if decisions were based solely on investment considerations. Because ESG criteria exclude certain securities/products for non-financial reasons, investors may forego some market opportunities available to those who do not use these criteria. ETFs trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund, and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. The Adviser's assessment of investments and ESG considerations may prove incorrect, resulting in losses, poor performance, or failure to achieve ESG objectives. The Adviser is also subject to actual or potential conflicts of interest. These and other risks are described in the prospectus.

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Revisiting evolving bond market opportunities

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Since the fall of 2022 when interest rates and bond yields hit their peak, credit spreads and interest rates have both declined, driving stellar short-term returns in the bond market. After such a significant stretch of strong performance in a relatively short period of time, how much has the opportunity set in fixed income changed, and what are the expectations for the various income-oriented sectors of the market?

Since the fall of 2022 when interest rates and bond yields hit their peak, credit spreads and interest rates have both declined, driving stellar short-term returns in the bond market. After such a significant stretch of strong performance in a relatively short period of time, how much has the opportunity set in fixed income changed, and what are the expectations for the various income-oriented sectors of the market?

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What does Thrivent Asset Management see in the future of fixed-income markets and the Federal Reserve’s approach to combatting inflation? Our leaders discuss their outlook, as well as the asset classes they’re watching.

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01/24/2023