Global X Conscious Companies ETF (KRMA) seeks to track the Solactive Conscious Companies Index, which measures the performance of companies demonstrating strong environmental, social, and governance (ESG) practices across developed and emerging markets. This international equity ETF provides exposure to socially responsible companies that score highly on sustainability metrics.
How It Works
KRMA uses a passively managed, modified market-capitalization-weighted approach that screens companies based on ESG criteria including carbon footprint, labor practices, and corporate governance standards. The underlying index excludes controversial sectors like tobacco, weapons, and fossil fuels while overweighting companies with superior sustainability scores. Holdings are rebalanced quarterly to maintain ESG alignment and geographic diversification across international developed and emerging markets.
Key Features
- Focuses exclusively on companies with strong ESG credentials, excluding controversial industries like tobacco and weapons manufacturing
- Provides international diversification beyond U.S. markets through developed and emerging market exposure with sustainability screening
- Zero expense ratio structure makes it cost-competitive for ESG-focused international equity exposure
Risks
- This ETF can lose value if ESG-focused companies underperform broader markets, as sustainable investing sometimes sacrifices returns for values alignment
- International currency fluctuations can reduce returns when foreign currencies weaken against the U.S. dollar, adding volatility beyond stock movements
- Emerging market exposure creates additional political and economic instability risks that could cause significant short-term declines of 20-30% during crises
Who Should Own This
Best suited as a satellite holding (10-25% of equity allocation) for values-driven investors with 5+ year time horizons seeking international ESG exposure. Medium-to-high risk tolerance required due to international equity volatility and emerging market exposure. Ideal for investors prioritizing sustainability alongside financial returns in tax-advantaged accounts.