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The Impact Shares Affordable Housing MBS ETF, also known as OWNS, is an exchange-traded fund with the ambitious mission of seeking to tap the capital markets to address long-standing affordable-housing and racial-wealth gap issues in U.S. society.<\/p>\n
Since its inception last summer, OWNS has focused on investing in agency mortgage-backed securities (MBS) that are collateralized by custom-created mortgage pools. Those securitized loan pools currently include 375 mortgages on homes owned primarily by minority and low-to-moderate income (LMI) families. <\/p>\n
The exchange-traded fund is advised by investment manager Impact Shares<\/strong>, with Community Capital Management <\/strong>(CCM), a pioneer in fixed-income social-impact investing, acting as a subadvisor. Some 82% of the loans backing the MBS now owned by the OWNS ETF have been made to low- and moderate-income borrowers, according to data provided by Impact Shares, with 196 loans made to minority women borrowers.<\/p>\n \u201cThe ETF has invested in loans across 37 states plus the District of Columbia, including 24 unique persistent poverty counties,\u201d Impact Shares notes in an announcement hailing the first anniversary of OWNS. <\/p>\n An ETF is a pooled investment security that is like a mutual fund but differs in that it can be traded on a stock exchange. In the case of OWNS, it is traded through the\u00a0New York Stock Exchange<\/strong>.<\/p>\n Impact Shares<\/a>\u00a0is a nonprofit investment firm that manages several socially responsible exchange-traded funds, including\u00a0OWNS<\/a>\u00a0\u2014 which was\u00a0launched in late July 2021. It is an ETF focused on purchasing agency MBS that are secured by \u201cpools of mortgage loans made to minority families, low- and moderate-income families, and\/or families that live in persistent poverty areas,\u201d according to\u00a0Impact Shares\u2019 website<\/a>.<\/p>\n In addition, the ETF invests in MBS backed by loan pools sourced from non-traditional loan originators, including Community Development Financial Institutions<\/a> and minority-owned banks.<\/p>\n The\u00a0OWNS ETF<\/a>\u00a0is still small by industry standards and struggling to grow and improve returns. As of the end of August, according to Impact Shares\u2019 website, OWNS had nearly\u00a0$97 million in net assets<\/a>, with some 5.45 million shares outstanding at a market price of $17.80 per share \u2014 with a year-to-date return of -8.44%. However, it\u2019s been a tough year for the stock market overall.<\/p>\n Still, the ETF is looking toward a better future. OWNS seeks to generate income for investors while also serving a social mission of reducing the racial-wealth gap by creating homeownership opportunities for minority communities as well as supporting the growth of affordable housing generally. <\/p>\n \u201cImpact Shares partners with leading social and environmental advocacy organizations to basically translate their missions into investable products,\u201d said\u00a0Marvin Owens<\/a>, chief engagement officer at\u00a0Impact Shares<\/a>\u00a0and former NAACP<\/strong> senior director \u201cThe goal is really to bring these important advocacy voices to the table as it relates to racial justice or gender equity or environmental justice.\u201d<\/p>\n Among Impact Shares\u2019 partners are the NAACP, the YWCA<\/strong>, the United Nations Capital Development Fund and more, according to Owens. He said the focus of Impact Shares is to give investors the opportunity to direct their capital toward causes they hold dear.<\/p>\n \u201cEvery day we face the challenge of trying to grow assets under management to the point where these funds [including the OWNS ETF] are not just seen as sort of unique boutique products, but also are able to truly make the impact that we want to have,\u201d Owens said. \u201cThankfully, we are partnering with groups that have been advocates on these issues for 100-plus years, and we are really taking our lead from them in terms of the corporate efficacy, so it’s been it’s been a good ride.\u201d<\/p>\n The lack of affordable housing affects people across the board \u2014 particularly when interest rates are rising as they are now. \u201cBut it hits and impacts people of color \u2014 Black, Latino and low-income families \u2014 even harder because of the broader economic conditions that they have to deal with,\u201d Owens said.<\/p>\n Today, the gap in homeownership rates between Black and white families, for example, is greater than when it was still legal to not sell a home to someone because of skin color \u2014 a discriminatory act made illegal by the 1968 Fair Housing Act.<\/p>\n In 1960,\u00a0a 27-point gap<\/a>\u00a0existed between Black and white homeownership. As of the end of the second quarter of this year, according to data from the\u00a0Federal Reserve Bank of St. Louis<\/a>, that gap was 29.3 points \u2014 with the white homeownership rate at 74.6%; the African American homeownership rate at 45.3% and the Latino homeownership rate at 48.3%.<\/p>\n \u201cWhen you are able to create more avenues for affordability, you then open the door to access, and access is really the big key,\u201d Owens said. \u201cWe can\u2019t close the racial-wealth gap and [expand] homeownership without access.\u201d<\/p>\n The OWN ETF\u2019s subadvisor, CCM, has been managing assets for banks since 1999 in the wake of updates to the Community Reinvestment Act (CRA) \u2014 which was enacted in 1977 to eliminate racial discrimination via redlining and then revised in the late 1990s to include investments. <\/p>\n \u201cOWNS is the culmination of our focus on addressing the racial-wealth gap,\u201d said Alyssa Greenspan, president and chief operating officer of CCM. \u201cCCM has invested over $3.9 billion in minority communities since our inception, including what we believe to be the first MBS pool consisting solely of women-led minority families in 2018. <\/p>\n \u201cOWNS enables all types of investors the opportunity to focus on affordable homeownership to help reduce the wealth-gap issue.\u201d <\/p>\n David Sand, chief impact strategist at CCM, added that the online real estate platform Redfin <\/strong>was asked to calculate the estimated values of homes linked to MBS in the OWNS portfolio to create some metrics on wealth creation.<\/p>\n \u201cBased on OWNS\u2019s current holdings, the loans have generated an average wealth effect of approximately $44,000 per mortgage over the length of each loan\u2019s investment period through August 3, 2022.\u201d Sand said. \u201cThis compares to a median family wealth of $36,100 for Hispanic Americans and $24,100 for Black Americans.”<\/p>\n OWNS allows qualified investors to direct their capital toward a specific geography, \u201ccreating customizable local impact within the ETF,\u201d according to Impact Shares. This allows banks to receive investment-test consideration on their CRA exams and also assists other investors, including pension funds, government entities and foundations, to achieve positive, localized social impact.<\/p>\n \u201cAffordable housing is a core component of community development efforts,\u201d said Dan Rollins, chairman and CEO of BancorpSouth<\/strong>. \u201cWe are proud to be invested in this innovative financial solution that looks to address the nation\u2019s ongoing need for affordable homeownership for LMI and minority borrowers, while also meeting our CRA needs.\u201d<\/p>\n Among the largest barriers to wealth creation for minorities and Black Americans, Owens added, \u201cis the lack of inherited wealth.\u201d\u00a0<\/p>\n \u201cProviding affordable housing to minority Americans is a crucial step in helping to address the widening racial-wealth gap and catalyzing economic growth in LMI communities,\u201d he said.<\/p>\n The post OWNS ETF taps capital markets to close racial-wealth gap<\/a> appeared first on HousingWire<\/a>.<\/p>\n