Alternative Investments/ESG: UBS Launches Low Carbon Equity ETFs

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The four new ETFs provide exposure to the US, European, eurozone, and Japanese equity markets.

UBS has launched four new ETFs that combine equity exposure with a focus on low carbon investing. The four UCITS funds track MSCI equity indices relating to the US, European, eurozone, and Japanese equity markets, and are listed on the SIX Swiss Exchange and Xetra. (ETF Strategy)

New sustainable equity ETFs from UBS

Name of ETF Ticker Code Index Expense Ratio
UBS MSCI USA ESG Universal Low Carbon Select UCITS ETF USESGA SW; AW1F GY MSCI USA ESG Universal Low   Carbon Select 5% Issuer Capped   Index 0.12%
UBS MSCI Europe ESG Universal Low Carbon Select UCITS ETF EESGA SW; AW1G GY MSCI Europe ESG Universal Low   Carbon Select 5% Issuer Capped   Index 0.12%
UBS MSCI EMU ESG Universal Low Carbon Select UCITS ETF EUESG SW; AW1H GY MSCI EMU ESG Universal Low   Carbon Select 5% Issuer Capped   Index 0.15%
UBS MSCI Japan ESG Universal Low Carbon Select UCITS ETF JPESG SW; AW1I GY MSCI Japan ESG Universal Low   Carbon Select 5% Issuer Capped   Index 0.17%

With the above ETFs, investors participate in the performance of large and medium-sized companies from the USA/Europe/Japan/European Economic and Monetary Union (as the case may be) that have comparatively low CO2 emissions and a high ESG rating in their sector, as well as reflect a positive development in their sustainability profile.

The investing methodology removes from consideration those companies that have operations linked to controversial weapons, civilian firearms, nuclear weapons, tobacco, alcohol, thermal coal power, and fossil fuel extraction.

To add a low carbon skew to the process, the companies in the parent MSCI index are ranked by carbon emissions and the top 5% of securities, by number, are removed. The highest ranking securities in terms of high fossil reserves and their potential carbon emissions per dollar of market capitalization are also removed.

Companies in the remaining population are then ranked in terms of ESG scores on a scale of AAA to CCC, and those in the lowest category of CCC are also removed from consideration. Those in the acceptable categories are weighted using their market capitalization and an adjustment factor is applied depending on their ESG categories.

Related Story:  UBS Launches New “Climate Aware” ETF

Image credit: UBS                                                   

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