Alternative Investments/ESG: BlackRock Launches Climate ETF In Singapore

The iShares MSCI Asia ex-Japan Climate Action ETF, listed on the Singapore Exchange (SGX), is the largest equity ETF launch in Singapore’s history.

BlackRock (NYSE: BLK) has made a significant move in the world of exchange-traded funds (ETFs) with the listing of the iShares MSCI Asia ex-Japan Climate Action ETF on the Singapore Exchange (SGX). This marks a milestone as the largest equity ETF launch in Singapore’s history, boasting an impressive US$426 million ($579.45 million) in assets. The fund’s foundation is bolstered by Prudential and a group of investors that includes Temasek and Singlife.

The primary objective of this ETF is to provide investors with easy access to leading companies across the Asia Pacific ex-Japan region that are dedicated to reducing carbon emissions. It does so with an annual management fee of just 0.18%.

The fund’s underlying index is the MSCI Asia ex-Japan Climate Action Index, carefully curated to feature the top 50% of companies in each Global Industry Classification Standard (GICS) sector. The selection process considers factors such as science-based targets, climate risk management, and green business revenue.

BlackRock emphasizes that this ETF is ideal for investors with a focus on low-carbon transition objectives, offering access to pioneering companies actively participating in the shift toward a low-carbon future. Notably, this marks the third iShares ETF to track MSCI Climate Action Indexes, following launches in the US and Japan.

The significance of this move is underscored by the growing importance of Asia Pacific in energy transition investment. Peter Loehnert, APAC head of iShares and index investments at BlackRock, said the region had transformative potential for climate-focused investors.

The collaboration between BlackRock, SGX Group, and MSCI has been instrumental in bringing this fund to Singapore, a nation with a notable impact on global climate leadership.

As climate change continues to be a critical investment risk factor, the decarbonization of portfolios is increasingly essential. Douglas Walls, head of index and analytics business for APAC at MSCI, underscores the role of MSCI Climate Action Indexes in identifying companies leading in climate transition efforts.

SGX Group, too, plays a pivotal role in addressing climate change by mobilizing capital and developing climate-related instruments, including this ETF. Michael Syn, senior managing director and head of equities at SGX Group, emphasizes the readiness of the market and investors for such tools.

The ETF’s prospects are promising, given the strong investor appetite for energy transition investments in the Asia Pacific ex-Japan region. The demand for climate-conscious assets is evident, with significant net inflows reported in the ETF market.

Related Story:  BlackRock Unveils STOXX-50 ETF With ESG Focus

Image by Gerd Altmann from Pixabay

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