It is the largest ETF tracking the ESG version of the S&P 500 market barometer.

The S&P 500 ESG UCITS ETF from UBS Asset Management was the first passive ETF to impart the Environment-Social-Governance (ESG) screen to the S&P 500 equity index. In a statement, UBS Asset Management said the ETF had passed the milestone of $ 1 billion in assets under management. (UBS)

The asset manager said the ETF had outperformed the standard S&P 500 index since inception by more than 550 bps, equivalent to 350 bps per annum.

The S&P 500 is the most popular and renowned index in the world and is tracked globally by passively-managed assets of $ 4.6 trillion.

Best of both worlds

The ETF serves as an ESG alternative to a core equity allocation within portfolios. Investors get the dual benefit of exposure to the S&P 500 equity index, as well as sustainability.

“Attribution results indicate that this outperformance is well diversified across sectors and primarily stems from the selection of higher ESG-rated companies,” said UBS. “For a portfolio with an active share of 25%, covering broad US equities, it is a very solid investment outcome, highlighting the potential benefits of ESG investing.”

According to the asset manager, the fund proved its resilience during the COVID 19 market drawdown.

“As investor demand for sustainable products continues to grow, the S&P 500 ESG ETF will remain an excellent option for those seeking an ESG solution for accessing this key US Equities portfolio building block,” said Florian Cisana, Head of ETF & Passive Sales Strategic Markets EMEA at UBS Asset Management.

The global shift in favor of ESG investing

According to Alex Bryan, Morningstar director of manager research passive strategies, a changing attitude towards ESG from investors and fund providers was driving the trend towards sustainable investing.

“The Covid-19 crisis has further highlighted the importance of building sustainable resilient business models,” he says.

Further, demographic shifts are also working in favor of ESG investing. Younger investors tend to be more inclined towards sustainable funds compared to earlier generations.

Plus, there is a growing fear of climate change, as well as a lens on corporate governance.

“The strong demand for ESG index-based portfolios underscores our belief that investors will continue to integrate ESG values into the core of their investments,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices, in the context of the UBS S&P 500 ESG UCITS ETF.

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