There’s no shortage of exchange-traded funds (ETFs) that say one of their objectives is to expand the pool of affordable housing or real estate. But there’s only one EFT that invests in mortgage-backed securities with the goal to boost home ownership within communities that conventional mortgage and real estate companies have long underserved.
Last year, Dallas-based Impact Shares, in a partnership with Community Capital Management, launched the Impact Shares Affordable Housing MBS ETF (listed on the New York Stock Exchange, and otherwise known, as OWNS), with the mission to “invest in the dignity of homeownership for these traditionally underserved communities.”
The managers of OWNS are investing in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, as well as those from Community Development Financial Institutions (CDFIs) and minority-owned banks. The fund has pledged that more than half of the loans in OWNS will be made to low- and middle-income borrowers. Such home loans that OWNS has issued, and will continue to fund, are in census tracts where more than 50 percent of the population is non-white and at least 40 percent of the population is living at or below the U.S. federal government’s poverty line.
“One of the largest barriers to wealth creation for minorities and Black Americans is the lack of inherited wealth,” Impact Shares’ CEO, Ethan Powell, explained to TriplePundit when the fund debuted last summer. “Homeownership is critical is this regard. It is also in the nation’s best interest — it can bring stability to families, revitalize distressed communities, and have a positive impact to economic growth.”
In the year since, OWNS' managers says that within its holdings, it has invested in various custom-created mortgage pools, which comprise at least 375 home loans. Of those loans, more than 80 percent have been made to low- and middle-income minority borrowers, with almost 200 loans issued to women of color. So far, the ETF has invested in loans across 37 states as well as the District of Columbia — including 24 different persistent poverty counties across the U.S. OWNS maintains that it is the first, and only, publicly-listed fund that supports affordable housing by extending credit to home borrowers who would otherwise be shunned by conventional banks and mortgage companies.
“OWNS is the culmination of our focus on addressing the racial wealth gap,” said Alyssa Greenspan, president and COO of Community Capital Management, in an emailed statement to 3p. “CCM has invested over $3.9 billion in minority communities since our inception, including what we believe to be the first [mortgage-backed securities] pool consisting solely of women-led minority families in 2018. OWNS enables all types of investors the opportunity to focus on affordable homeownership to help reduce the wealth gap issue.”
In the grand scheme of equities, OWNS is tiny: At last count, its net holdings were $92 million. It’s been a rough going in 2022 for the fund, and OWNS has lost about 8 percent of its value year-to-date. Nevertheless, we have to put OWNS’ recent performance in perspective. Year to date, the S&P 500 has fallen in value by approximately 18 percent, while the Down Jones Industrial Average has declined 14 percent in value since early January. It’s been a difficult year for many stocks and funds. But markets do eventually correct themselves, and OWNS is providing a market-driven solution for homeowners whose families have long been denied the financial benefits of intergenerational wealth, which is largely made possible by home ownership.
In addition to OWNS, Impact Shares takes on additional challenges beyond affordable housing by managing three other socially conscious ETFs. The NAACP Minority Empowerment ETF aligns with Morningstar’s Minority Empowerment Index, which provides exposure to U.S. companies with strong racial and ethnic diversity, equity and inclusion policies in place. For investors who seek out companies that demonstrate solid support of women’s empowerment and gender equality, the four-year-old YWCA Women’s Empowerment ETF offers such an option. And the Sustainable Development Goals Global Equity ETF pools the equities of companies that demonstrate strong alignment with the U.N. Sustainable Development Goals (SDGs).
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Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.
Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.