Ossiam adds ESG screening to US minimum variance ETF

Jun 21st, 2017 | By | Category: ETF and Index News

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Smart beta ETF provider Ossiam has announced it is implementing changes to the Ossiam US Minimum Variance ETF to include ESG screening and switch from synthetic to physical replication. As a result, the name of the ETF will change to Ossiam US Minimum Variance ESG ETF (LON: USMV).

Ossiam adds ESG screening to US minimum variance ETF

The Ossiam US Minimum Variance ESG ETF (LON: USMV) will harness ESG data from Sustainalytics.

The fund will track the US ESG Minimum Variance Index which reflects the performance of a dynamic selection of 90% of the most liquid stocks satisfying ESG criteria from the Solactive US Large Cap Index. The Solactive US Large Cap Index tracks the performance of approximately 500 leading companies in major industries in the US.

The ESG data is provided by Sustainalytics, a leading global analytics firm covering the ESG sector, and includes screening processes whereby companies engaged in weapons manufacturing or those embroiled in controversy are eliminated. All final constituents are weighted in such a way as to minimize portfolio volatility.

Compared to the US large cap universe, the ESG screening and volatility optimization process has resulted in a significantly reduced exposure to the information technology sector (6.8% vs 22.6%) and considerably larger exposures to the consumer staples and consumer discretionary sectors (19.6% vs 9.4% and 19.4% vs 12.5% respectively). Other significant sector exposures include healthcare (15.0%) and industrials (13.5%).

Bruno Poulin, CEO of Ossiam, commented on the change, saying, “We have adapted our already successful fund to take into account preferences of existing and new investors. We are pleased to see the investment market moving to a point where accounting for ESG factors will be the standard for long-term investment. This is consistent with our ethos of high ethical standards in the funds we develop and how we conduct business.”

By end of May 2017, the fund had total AUM of €328m. It has a total expense ratio of 0.65% and is also listed on the Borsa Italiana, Euronext Paris and Deutsche Börse Xetra.

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