Amplify Etho Climate Leadership U.S. ETF (ETHO) seeks to track the Etho Climate Leadership Index, which measures the performance of U.S. companies demonstrating strong environmental, social, and governance practices while excluding fossil fuel and controversial industries. This ESG-focused equity ETF provides exposure to climate-conscious American businesses across all market capitalizations.
How It Works
ETHO uses a rules-based screening methodology that starts with a broad U.S. equity universe and applies ESG filters to exclude companies involved in fossil fuels, weapons, tobacco, and other controversial sectors. The remaining companies are weighted based on their climate leadership scores, which evaluate carbon efficiency, renewable energy usage, and sustainability initiatives. The fund rebalances quarterly to maintain alignment with index changes and typically holds 200-400 stocks with a focus on mid- and large-cap companies.
Key Features
- Launched in January 2024, making it one of the newest climate-focused ETFs with modern ESG screening methodology
- Zero expense ratio structure eliminates management fees, providing cost-effective access to climate leadership investing strategies
- Combines negative screening (excluding harmful industries) with positive weighting toward companies leading climate innovation and sustainability
Risks
- This ETF can lose value if ESG-focused stocks underperform broader markets, as sustainable investing sometimes trails during economic recoveries favoring traditional energy
- Sector concentration risk exists as climate leaders cluster in technology and clean energy, potentially amplifying volatility during sector rotations
- Being newly launched with limited assets, the fund faces potential closure risk if it fails to attract sufficient investor interest
Who Should Own This
Best suited as a satellite holding (10-25% of equity allocation) for ESG-conscious investors with 3+ year time horizons seeking climate-aligned U.S. exposure. Medium-to-high risk tolerance required due to sector concentration and new fund uncertainty. Appeals to values-based investors willing to accept potential performance trade-offs for environmental alignment.