Alternative Investments/ESG: iShares Launches ESG ETF For Low Volatility Large And Mid-cap Stocks

The new ETF is an ESG “twin” to its $29 billion low volatility US equity ETF.

The iShares ESG MSCI USA Min Vol Factor ETF (NASDAQ: ESMV) is a newly launched fund from Blackrock that offers investors the opportunity to invest in U.S. large and mid cap stocks that have low volatility and yet offer reduced carbon exposure and better ESG characteristics. (Seeking Alpha)

iShares ESG MSCI USA Min Vol Factor ETF (NASDAQ: ESMV)

The new ETF tracks the MSCI USA Minimum Volatility Extended ESG Reduced Carbon Target Index which is a subset of the parent MSCI USA Index universe of large and mid-cap stocks listed on US exchanges.

The index components are derived by removing companies embroiled in ESG-related controversies as well as firms deriving significant revenue from business activities linked to controversial weapons, tobacco, civilian firearms, thermal coal, and oil sands.

Thereafter, a separate screening process homes in on stocks that have minimum volatility and yet meet certain ESG specifications.

Relative to the parent MSCI USA, these include at least a 20% improvement in the weighted-average ESG score (based on MSCI ESG Research’s proprietary sustainability analysis), a reduction of at least 30% in total carbon intensity (based on Scope 1 and Scope 2 emissions data), and at least a 30% reduction in potential carbon emissions (defined as fossil fuel reserves per dollar of market capitalization).

The fund will charge an expense ratio of 0.18%. In contrast, its non-ESG counterpart, the iShares MSCI USA Min Vol Factor ETF, charges 0.15%.

The latter is the world’s most popular low volatility ETF with AUM of $29 billion.

Related Story: BlackRock Adds Two ESG Fixed Income ETFs