Alternative Investments/ESG: UBS Debuts ‘Dividend Aristocrats ESG Elite’ ETF Suite

The new ETFs from UBS offer a happy combination of dividend yields and sustainability criteria.

UBS Asset Management has introduced a new suite of income-focused ETFs designed for investors interested in sustainable dividends and ESG (Environmental, Social, and Governance) criteria. The suite, called ‘Dividend Aristocrats ESG Elite,’ consists of two funds that provide exposure to global developed and US equity markets.

The UBS ETF (IE) S&P Dividend Aristocrats ESG Elite UCITS ETF (GLDVD) is a repurposed fund with an expense ratio of 0.30% and approximately $200 million in assets. The UBS S&P USA Dividend Aristocrats ESG Elite UCITS ETF (USDVD) is a new fund with an expense ratio of 0.40%.

These ETFs are available for trading on various exchanges and comply with the European Union’s Sustainable Finance Disclosure Regulation (SFDR). (ETF Strategy)

The funds are linked to socially responsible versions of S&P Dow Jones Indices’ ‘Dividend Aristocrats’ index strategy, which centers around companies that have consistently upheld or raised their dividend payments over a defined period. Its objective is to offer a dependable and sustainable income source while showing preference for companies with stable operating earnings, consistent growth in cash flow, and strong corporate discipline.

Companies with dividend yields above 10% are excluded to avoid potential dividend traps.

The ETFs’ ESG methodology involves excluding companies that violate UN Global Compact principles, are involved in severe ESG controversies, or operate in controversial industries such as weapons, tobacco, alcohol, and others listed.

Potential constituents are also evaluated using ESG scores based on the asset manager’s ‘Corporate Sustainability Assessment,’ and companies in the lowest 25% of their universe are not eligible for inclusion.

The US index includes all remaining eligible constituents, while the global index selects the top 100 stocks with the highest dividend yields. Constituents are weighted by dividend yield, with a cap of 4% applied to individual stocks at each rebalance.

Related Story: A New UBS ETF Gives Exposure To Dividend-Paying Swiss Companies With High ESG Scores

Images by Prawny and Clker-Free-Vector-Images from Pixabay

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