Amundi has expanded its suite of ‘ESG Leaders’ ETFs with the launch of two new funds on London Stock Exchange targeting equities in China and emerging markets excluding China.
Gaëtan Delculée, Global Head of ETF, Indexing & Smart Beta Sales at Amundi.
Both ETFs have received significant initial investment from global asset manager AllianceBernstein.
The Amundi MSCI China ESG Leaders Select UCITS ETF (USD: CNEU LN; GBP: CNEG LN) and Amundi MSCI Emerging ex-China ESG Leaders Select UCITS ETF (USD: EMXU LN; GBP: EMXG LN) have come to market with approximately $150 million and $230m in assets, respectively.
Linked to ESG Leaders indices from MSCI, the ETFs provide exposure to a subset of stocks from within their target geographic territory, selecting the companies with the strongest environmental, social, and governance (ESG) characteristics relative to their sector peers.
The China-focused ETF tracks the MSCI China ESG Leaders Select 5% Issuer Capped Index which is based on the parent MSCI China Index, a broad representation of large and mid-cap Chinese equities including A-shares, H-shares, B shares, Red chips, P chips, and foreign listings such as ADRs.
The EM ex-China ETF, meanwhile, is linked to the MSCI EM ex China Region ESG Leaders Select 5% Issuer Capped Index which is constructed from the parent MSCI EM ex-China Index. This parent universe covers large and mid-cap stocks from 26 developing nations worldwide, excluding China.
Using insights from MSCI ESG Research, MSCI’s ESG business, the methodology first excludes companies with business activities in the alcohol, tobacco, gambling, nuclear power, and weapons industries as well as firms that are embroiled in severe ESG-related controversies.
The remaining constituents are then assigned an ESG score between AAA and CCC based on the most relevant ESG factors by industry and risk exposure. The rating process aims to identify ESG leaders and laggards within each industry.
The index selects the securities with the highest ESG scores while targeting a 50% sector representation versus the parent indices. Firms with ratings below BB are not eligible for inclusion. The selected constituents are weighted by free float-adjusted market cap subject to a single issuer cap of 5%. The indices are reconstituted annually in May.
The two new ETFs come with expense ratios of 0.35% and have been classified as Article 8 products under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
Amundi offers a further four ESG Leaders ETFs focused on equities listed on global developed, US, European, and emerging market exchanges. Collectively, these funds house over $4.7bn in assets and come with expense ratios ranging between 0.15% and 0.25%.
Gaëtan Delculée, Global Head of ETF, Indexing & Smart Beta Sales at Amundi, commented: “We are delighted with our partnership with AllianceBernstein which illustrates our commitment to providing ongoing dialogue with clients and responding to their individual needs. As a dedicated partner and responsible investing leader, we believe it is incumbent upon us to guide and support our clients throughout their ESG journey.”
David Hutchins, Portfolio Manager of Multi-Asset Solutions at AllianceBernstein, added: “Integrating consistent ESG considerations into all of our investments within our multi-asset portfolios, including our target-date funds widely used by UK DC plans, is fundamentally important to the way we and our clients think. In addition, we no longer think that China should be considered as an emerging market and a more sophisticated approach is needed to the world’s second-largest economy which increasingly shares little in common with the emerging markets it is often bucketed with. We are proud to be partnering with Amundi for this venture and look forward to working with the team there.”