Billionaire investor Paul Tudor Jones created a way to rank companies on social impact -- now Goldman Sachs is turning it into a fund

  • Goldman Sachs is rolling out a new exchange-traded fund, based on Paul Tudor Jones‘ Just Capital.
  • Just Capital uses a model to rank companies based on social impact metrics, including environmental, social, and governance issues.
  • Jones says the ETF will eventually “rival the S&P and the Nasdaq.”
  • This post is part of Business Insider’s ongoing series on Better Capitalism.

Goldman Sachs is turning Just Capital, billionaire investor Paul Tudor Jones’ nonprofit foundation that produces a ranking of companies based on social impact, into a real financial product.

Goldman rolled up the model behind the ranking into an exchange-traded fund, or ETF, that tracks the top performers on Just Capital’s weighted index, according to The New York Times’ Andrew Ross Sorkin.

It’s part of a larger push from Goldman into diversifying its business and making ESG (environmental, social, and governance issues) more central to the bank.

Until now, Just Capital was only a list of Russell 1000 companies – an index of 1000 of the biggest corporations by market capitalisation – ranked based on social impact metrics like environmental responsibility, fair wages, and corporate governance.

“I think it’s going to be a really big ETF down the road. I think it’s going to rival the S&P and the Nasdaq because I think it has both potentially, possibly, performance characteristics and you get to feel good when you own it,” Jones told Sorkin on CNBC Tuesday morning.

According to The New York Times, the ETF would have outperformed the overall Russell 1000 by 3.47 per cent over the past two years, though there’s not enough to data to project the fund’s performance further back.

“If you’re going to have true social change, if you’re going to have real societal betterment, it has to start with the private sector. It has to start with business,” Jones said on CNBC.

Companies are selected for the ETF based on polling data from the issues people say they care about. Each metric – take environmental responsibility, for example – is a given a weighted metric. The top performers from the Russell 1000 are included in the ETF, though the list of companies can shift from year-to-year.

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