Lyxor expands suite of ESG Trend Leaders ETFs

May 16th, 2018 | By | Category: ETF and Index News

Lyxor has launched three new sustainability-focused ETFs, providing exposure to equities in the eurozone, the US, and globally. The funds, part of the firm’s newly unveiled “Trend Leaders” suite of ETFs, target firms with high environmental, social and governance (ESG) ratings as determined by index provider MSCI.

Lyxor has launched three new sustainability ETFs in Xetra.

Lyxor has launched three new sustainability ETFs on Xetra.

The ETFs have been listed on Xetra and London Stock Exchange (LSE).

The Lyxor MSCI World ESG Trend Leaders UCITS ETF (LESW GR) tracks the MSCI World Select ESG Rating and Trend Leaders Index. The index screens its parent index—the MSCI World Index—for companies which have robust ESG profiles and show positive trends in improving those profiles. The parent index includes mid- to large-cap stocks across 23 developed market countries.

To construct the reference index, MSCI employs a seven-point ESG rating scale from ‘AAA’ to ‘CCC’ to rank companies according to several ESG factors. Companies are also grouped into percentiles based on how well their ESG practices measure up compared to industry peers.

The index tries to maintain the same sector weights as its parent index while targeting 50% coverage within each sector. Currently, the index is most heavily weighted towards information technology (19.5%), financials (19.2%) and consumer discretionary (12.4%). Geographically, it leans strongly towards US-listed companies, with more than half its exposure (57.3%) attributed to the country. Japan (11.0%), France (4.5%) and Canada (3.8%) are the next largest exposures.

The fund has a total expense ratio (TER) of 0.30%. It trades in euros on Xetra and in US dollars on LSE (Ticker: WESG LN).

The Lyxor MSCI USA ESG Leaders UCITS ETF (LESU GY) tracks the MSCI USA Select ESG Rating and Trend Leaders Index. The index uses the same investment screening and construction process as described above but applies it to US-listed companies only.

Like the world ESG index, the US index aims for the same sector weights as its parent index (in this case the MSCI USA Index) in order to limit systematic risk from the ESG selection process. Currently, the US ESG index has its largest sector weight in information technology (29.1%), followed by financials (15%) and health care (11.3%).

The fund has a slightly lower TER of 0.25% compared to its global counterpart. It also trades in euros on Xetra and in US dollars on LSE (Ticker: UESG LN).

The final ETF is the Lyxor MSCI EMU ESG Trend Leaders UCITS ET (LESE GY), which applies the series methodology to equities listed in the eurozone. LESE tracks the MSCI EMU Selected ESG Rating and Trend Leaders Index, which covers ESG companies in ten developed markets. The parent index is the MSCI EMU Index.

The index is weighted most heavily towards financials (21.9%), industrials (14.4%) and consumer staples (9.2%). Country-wise, France (31.5%) and Germany (28.9%) together account for the majority of the exposure with Spain (13.4%) and the Netherlands (10.9%) also having significant contributions.

The fund has the lowest TER of the three funds, costing 0.20%. It trades in euros on Xetra and in pounds sterling on LSE (Ticker: EESG LN).

Lyxor unveiled the “Trend Leaders” series in March with the launch of the Lyxor MSCI EM ESG Trend Leaders UCITS ETF (LESG GY). The fund, which trades in euros on Xetra, applies the ESG methodology to the parent MSCI Emerging Markets Index and has a TER of 0.30%. Along with the new fund launches, Lyxor has cross-listed the emerging markets ETF onto LSE where it trades in US dollars.

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