Fund Solutions

This Week’s Fund News: BlackRock, CSAM Unveil German Equities ESG ETFs

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BlackRock, Credit Suisse, Qontigo, HANetf, Amundi, Addenda Capital, Fidelity. 

Both BlackRock and Credit Suisse Asset Management have launched ESG-focused ETFs referencing German equities indices licenced from Qontigo. BlackRock’s iShares DAX ESG UCITS ETF tracks the DAX ESG Target Index, which aims to reflect the performance of the DAX while maximising its ESG score and reducing its carbon intensity by at least 30%. “Many DAX companies do business on an international level. This means that in addition to their roots in the domestic market, they are also closely linked to the global economy. In this respect, the iShares DAX ESG UCITS ETF reflects the strength of a large part of the German economy as well as the global economy. This makes it interesting for domestic and international investors,” said Dirk Schmitz, Country Head Germany, Austria and Eastern Europe at BlackRock. Credit Suisse’s new ETF references the DAX 50 ESG Index, a broad market cap benchmark for German sustainable equities, which extends beyond the DAX itself. Selection of its fifty constituents is based on ranking by market capitalisation, turnover and ESG score. “Our new ETF on the DAX 50 ESG allows investors to participate in the growth of Europe’s largest economy while respecting the ESG standards defined by the index methodology. The new ETF complements our range of 105 index mutual funds and ETFs with combined assets of €117 billion,” said Valerio Schmitz-Esser, Head of Index Solutions at Credit Suisse Asset Management. Components of the DAX 50 ESG Index are drawn from the wider HDAX using norm-based exclusion criteria in accordance with the UN Global Compact Principles, as well as sectoral screening. The remaining stocks are ranked by market capitalization, turnover and ESG scores calculated by Sustainalytics. The top 50 stocks are selected and weighted by free-float market capitalisation, subject to a 7% component cap.

HANetf an independent provider of UCITS ETFs, has announced that the Solar Energy UCITS ETF will be listed on the London Stock Exchange in June, offering the first ‘pure-play’ exposure to the global solar industry to European investors. Available on the HANetf platform, the ETF will track the EQM Global Solar Energy Index (SOLARNTR) which is focused on companies that derive significant revenue from solar energy-related business operations. This includes manufacturing of photovoltaic, solar cells, and systems; producers of solar power generation, equipment, and components; providers of solar power system installation, development, and financing; and/or manufacturing of solar-powered charging and energy storage systems. The SOLARNTR index back-tested performance shows it achieved 211.32% returns in the past 12 months. Companies are screened for compliance with UN Global Compact Principles plus operational business involvement in the fields of oil sands, fossil fuel or controversial weapons. The Solar Energy ETF is expected to be scheduled as Article 8 under the Sustainable Finance Disclosure Regulation. “Launching the Solar Energy ETF expands our range of innovative ETFs and ETCs and is another European first which we are delighted to bring to market with EQM Indexes. We are very proud of the many firsts we have brought to the European ETF market including Cloud computing, Emerging markets ecommerce, 5g infrastructure and medical cannabis to name a few,” said Hector McNeil, co-Founder and co-CEO at HANetf.

French asset manager Amundi is expanding its ESG ETF range by transitioning six of its existing fixed-income vanilla ETFs into equivalent ESG exposures. Once the six products are added to Amundi’s ESG fixed income ETF range in the coming weeks, by switching to an ESG-focused benchmark, the expanded will subsequently include both investment grade and high yield corporate exposures in addition to aggregate exposures and some flagship strategies such as floating rate notes. All the transitioned exposures will be classified under Article 8 of SFDR. “ESG is at the centre of all of our client conversations and at the core of our product development strategy. Today, every new product is systematically considered through an ESG lens and we also continually assess the interest in transitioning to ESG exposures in line with investors’ expectations,” said Fannie Wurtz, Head of ETFs, Indexing and Smart Beta at Amundi.

Canadian investment management firm Addenda Capital has launched two investment funds designed to support companies ‘efforts to reduce greenhouse gas (GHG) in line with net-zero 2050 goals. Aimed at Canadian institutional investors and high net worth clients, the Addenda Climate Transition Canadian Equity Pooled Fund and the Addenda Climate Transition International Equity Pooled Fund both invest in public companies that have mapped out their road to transition and engage with them regularly to support their carbon reduction objectives. The funds are actively managed by portfolio management teams who will apply strengthening selection criteria over time. “We view our approach as more constructive than divestment. We aim to support and encourage companies in their efforts to reduce GHGs in this massive shift that is necessary to transform the Canadian economy and our society for generations to come,” said Roger Beauchemin, Chief Executive Officer, Addenda Capital.

Fidelity Investments Canada has unveiled a suite of climate-focused investment products designed to benefit from opportunities associated with a global transition to low-carbon economy over the long term. Fidelity Climate Leadership Funds will leverage Fidelity’s active investment approach and global fundamental research network. Portfolio managers are supported by insights from a dedicated Sustainable Investing Team as well as Fidelity’s proprietary Sustainability Ratings framework. “As climate related issues reshape the global financial landscape by creating both long-term risks and opportunities, investors are increasingly asking for actively-managed investment vehicles that aim to capitalise on this secular trend,” said Kelly Creelman, Senior Vice President, Products.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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