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Fund Solutions

Invesco ESG ETF Suite Offers Sectoral Exposures

Global asset manager Invesco has partnered with S&P Dow Jones Indices on a new range of sector-focused ETFs which seek to reduce GHG emissions and improve ESG performance while seeking targeted exposures. Launching with four funds initially – focused on energy, financials, heath care and information technology – the Invesco S&P World Sector ESG UCITS ETFs will track the performance of the S&P Developed Ex-Korea LargeMidCap ESG Enhanced Sector Indices, a new series of S&P Dow Jones benchmarks. The firms said each index seeks to enhance its ESG profile and reduce its carbon footprint, while minimising country and stock deviations relative to the standard sector index. Alongside standard ethical exclusions, securities are excluded based on UNGC non-compliance, low ESG performance as measured by S&P DJI ESG Score, high carbon intensity and high exposure to controversy. Remaining securities and optimised and reweighted for a higher overall ESG score than the overall industry group, and a 30% decrease in carbon intensity relative to the standard index. Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, said: “The strength of flows into ESG strategies over the past few years is partly due to investors wanting to incorporate sustainability throughout their portfolios. Beyond core equity and fixed income holdings, we are now seeing many of these investors turn their attention towards more targeted exposures, such as sectors, and quite rightly demanding a similarly robust and thoughtful process for integrating ESG.” According to Morningstar, European ESG-focused ETFs gathered €10.4 billion in Q1 2023, down from €14.9 billion in Q4 2022, representing 27% of all flows into ETFs and ETCs in the period, down from 55% in the fourth quarter. Overall, assets in ESG ETFs increased by 9.2% to €267.6 billion and now represent 18.8% of total assets invested in ETFs and ETCs in Europe.

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