Symbol: GRID | ETF | AUM: $11,671.8mm | Expense Ratio: 0.56%
Investment Objective | The Fund seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of the Nasdaq Clean Edge Smart Grid Infrastructure Index. |
Sustainable Category | Primary: Thematic Investing. |
Underlying Index | Nasdaq Clean Edge Smart Grid Infrastructure Index |
Index Provider | Nasdaq, Inc., using business classifications supplied by Clean Edge, Inc. |
Parent (Base) Index | None — a bottom-up thematic universe, not screened from a broad-market parent index. |
Construction Approach | Semiannual reconstitution (March/September). Eligible universe consists of companies classified by Clean Edge as smart grid, electric infrastructure, EV network, smart building, software, or other grid-related-activities companies, meeting minimum market cap (≥$100mm), liquidity (3-month ADVT ≥$500k), float (≥20%), and seasoning requirements. All eligible companies are included as constituents — there is no further ESG or revenue-threshold screen beyond the industry classification itself. |
ESG Rating / Scoring Threshold | NA — no ESG rating, score, or controversy screen is applied at the index level. |
Exclusions / Screens | None disclosed in the index methodology. |
Weighting Methodology | Modified free-float market-cap weighted, rebalanced quarterly, with a two-tier category structure: ● “Pure Play” companies (significant revenue from smart-grid activities): fixed at a collective 80% weight; no single stock >8%; no more than five stocks >4%. ● “Diversified” companies (broader grid-modernization exposure): fixed at a collective 20% weight; no single stock >2%. |
Risk / Tracking-Error Constraints | First Trust targets a correlation of 0.95 or better between Fund and Index performance (before fees/expenses). No explicit tracking-error budget or sector-neutrality constraint versus a broad-market benchmark is disclosed, since the index has no such parent. |
Shareholder-Issuer Engagement / Proxy Voting | First Trust Advisors L.P. votes proxies on the Fund’s behalf per its own proxy voting policy. |
Reporting / Disclosure | No fund-specific ESG or “sustainability characteristics” report identified for GRID; disclosure is limited to standard fact sheets, holdings, and prospectus/SAI filings on ftportfolios.com. |
Notes | -Despite frequent characterization as a “clean energy” or ESG-adjacent fund, GRID is a pure thematic/sector product — selection is driven entirely by business-activity classification, with no ESG ratings, controversies, or exclusionary screens applied. This is the clearest “thematic-only” example among the three funds profiled here -Sustainable categories fall into seven buckets: 1. Values-based investing, 2. Negative/positive screening or exclusionary strategies, 3. Impact investing, 4. Thematic investing, 5. ESG integration, 6. Shareholder advocacy, issuer engagement and proxy voting, and 7. Structural sustainability. These are not mutually exclusive. The primary and secondary sustainable investing approaches will be identified under the Sustainable Category. |