UBS Asset Management has launched what it claims to be “the first Ucits ETF tracking a climate transition index based on the S&P 500 index universe”.
The offering, UBS ETF S&P 500 Climate Transition ESG UCITS ETF, tracks the S&P 500 Climate Transition Base ESG Index, meets the EU Climate Transition Benchmark and is classified as Article 9 under the EU’s Sustainable Finance Disclosure Regulation.
Fund manager calls for long-term thinking on climate transition
The asset manager has shared that the fund is “for investors who require US large cap exposure with a net zero overlay combined with improvement of the overall ESG profile”.
The S&P 500 index tracked by the fund – the flagship index for US equity exposure – employs a two-stage process for selecting and weighting portfolio constituents to be collectively compatible with the transition to a low-carbon and climate-resilient economy.
The first step involves defining an eligible ESG universe by applying business activity exclusions, such as excluding companies involved in UN Global Compact violations or exceeding revenue thresholds in activities like controversial weapons, military contracting, small arms, tobacco, coal, etc.
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The second step is designed to help investors manage climate transition risks and capture climate change opportunities using an optimiser to provide for a 30% initial carbon intensity reduction followed by a 7% year-on-year reduction trajectory.
According to the asset manager, the resulting S&P 500 Climate Transition Base ESG Index “improves the overall ESG score compared to the parent index”.
The index aims to check tracking errors by minimising the active share of sectors, industries and constituents, ensuring a broad representation of the underlying market with 369 constituents.
The ETF, available in a USD share class as well as currency-hedged share classes (EUR and GBP), will be listed across key European exchanges, including the London Stock Exchange, Xetra, Borsa Italiana and SIX Swiss Exchange.
