iShares launches two ESG equity ETFs

Jul 14th, 2016 | By | Category: Equities

iShares, the exchange-traded fund arm of global asset manager BlackRock, has launched two sustainable equity ETFs. The ETFs track MSCI indices focused on environmental, social and governance (ESG) ratings. The launch is the latest from the provider offering investors ethical exposures and adds to its range of ESG products.

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iShares launches two new ETFs tracking MSCI ESG indices

The iShares Sustainable MSCI Emerging Markets SRI UCITS ETF (LSE: SUSM) tracks the MSCI Emerging Markets SRI index, which includes large and mid-cap equities across 23 emerging market countries. The ETF has a total expense ratio of 0.35%.

The iShares Sustainable MSCI USA SRI UCITS ETF (LSE: SUAS) tracks the MSCI USA SRI Index, which includes large and mid-cap companies in the USA. It has a TER of 0.30%.

The indices consist of companies with MSCI ESG ratings level BB and above. This metric rates companies on 37 key ESG factors, including carbon emissions and business ethics. The indices aim to minimise exposure to activities involving alcohol, tobacco, gambling, civilian firearms, military weapons, nuclear power, adult entertainment and genetically modified organisms (GMOs).

There has been a recent uptake in demand from investors for ethical investment. Earlier this year iShares launched the iShares Euro Corporate Bond Sustainability Screened 0-3yr UCITS ETF (SUSE) the provider’s first sustainable bond ETF – and in May it launched the iShares Sustainable MSCI Japan SRI EUR Hedged UCITS ETF (SUSJ) on the London Stock Exchange.

While there are a number of indices offering investors sustainable investment exposure, iShares is one of only a handful of providers offering ETFs with this sector exposure. Another is UBS, who launched the UBS Barclays MSCI US Liquid Corporates Sustainable UCITS ETF, which has a TER of 0.20%, last year and the UBS ETF – MSCI Japan Socially Responsible ETF, which has a TER of 0.40%.

Tom Fekete, Head of Product for iShares EMEA, said: “The investment goal of many investors includes generating positive long-term and sustainable impact, and this approach is growing into a mainstream trend. These two funds seek to provide this growing group of investors with the tools to be nimble and cost-effective in their portfolio allocation across asset classes. This is an exciting area of innovation that we will continue to focus on over the next few years.”

iShares currently manages more than $200bn of assets in the sector globally.   

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