From Q1 next year, the robo-advisor expects to have its own ETFs targeting ecosystems and biodiversity, clean water and waste, and climate tech themes, with the latter focused on renewable energy, batteries and carbon sequestration and storage.
Outside of green themes, Circa’s impact range will address health and wellbeing – with companies involved in healthcare, health access and overlooked drugs – and social and economic empowerment – focused on access to housing, banking, internet and education.
The firm currently offers users portfolios with differing levels of risk, built on thematic, green bond and government bond ETFs from existing issuers such as Legal & General Investment Management (LGIM) and Rize ETF.
Aside from its new products being built in-house, the ETFs are expected to offer the unique feature of direct voting rights to investors of all levels.
McGillycuddy said: “Most of the votes that happen at AGMs are boring but if there is something we think is particularly engaging, we could essentially crowdsource an opinion from our customers based on how they vote as a block.
“We are still figuring out what we are going to pass through to our customers, the last thing we want to do is clutter the app with loads of random issues that are of no interest, so there is going to have to be a bit of curation with that.
“At the wealth manager and institutional level, they will probably be keen to vote more often. We will also have our own engagement policy and voting stance, which will be whatever is most positive from an impact perspective.”
After almost two years in the making, McGillycuddy said the ETFs will “touch wood” obtain Central Bank of Ireland (CBI) approval this month.
“We have built our own ICAV structure. Others use white-label providers who provide a structure but our way allows us to create new themes and ETFs in the future with minimal additional costs and the platform is ours,” he continued. “The more assets we get, the cheaper the platform is, there are real economies of scale from doing that.”
The new strategies will replace the ETFs from other providers within Circa 5000’s portfolios, McGillycuddy added, but will also be accessible to external investors on brokerage platforms, wealth managers and independent financial advisers (IFA).
The ETFs will initially be available to the firm’s app users and other UK investors once they are passported from the EU and receive recognition from the Financial Conduct Authority (FCA).
Circa will push for a Europe-wide launch once the ETFs have been seeded, McGillycuddy said.
On constructing the products, he said the firm’s head of investment, Charlie Macpherson, had been “instrumental” in working with counterparties to build its Irish fund platform and collaborating with BITA and Impak to build the ETFs’ underlying indices.
Earlier this month, Circa hired Magdalena Kowalik as its head of capital markets from Global X, moving it one step closer to bringing its ETFs to market.
Once the first five equity thematics have launched, McGillycuddy said Circa would focus on green and impact bond ETFs, though these would follow “no formal timeframe”.