Amundi has launched a new socially responsible ETF targeting the small-cap segment of the US equity market.
The ETF delivers ESG-modified exposure to US small-cap equities.
The Amundi S&P SmallCap 600 ESG UCITS ETF has been listed on Deutsche Börse Xetra in euros (MWON GY) as well as on SIX Swiss Exchange in US dollars and Swiss francs.
The fund is linked to the S&P SmallCap 600 ESG+ Index which is based upon S&P Dow Jones Indices‘ flagship performance benchmark for US small-cap stocks – the S&P SmallCap 600 Index.
The S&P SmallCap 600 Index covers the 600 lowest capitalization stocks within the broad market S&P 1500 Composite which covers 90% of the total market capitalization of the US equity market.
The S&P SmallCap 600 ESG+ Index is designed to closely replicate the risk and return of its parent universe while providing a significant boost in environmental, social, and governance (ESG) performance.
Its construction methodology involves first removing companies with business activities linked to controversial and conventional weapons, thermal coal, oil sands, and tobacco as well as firms embroiled in ESG controversies and those that perform poorly in relation to globally accepted standards such as United Nations Global Compact Principles.
The remaining constituents are then assigned ESG scores calculated by SAM, an ESG ratings firm acquired by S&P Global. ESG scores are based on SAM’s Corporate Sustainability Assessment which uses company-provided data, publicly available information, or a combination thereof.
The methodology removes companies ranking in the bottom 25% of each Global Industry Classification Standard (GICS) sector, as well as firms ranking in the bottom 10% of the parent universe, when ordered by ESG score.
To approximate the risk and return profile of the parent universe, the index sets the weight of each GICS sector equal to its weight in the S&P SmallCap 600 Index. Within each sector, constituents are weighted by float-adjusted market capitalization. Rebalancing occurs annually in April.
The ETF comes with an expense ratio of 0.35%.
Credit Suisse also offers an ESG-tailored US small-cap ETF in Europe. Launched in June 2020, the CSIF (IE) MSCI USA Small Cap ESG Leaders Blue UCITS ETF (CSY8 GY) tracks the MSCI USA Small Cap ESG Leaders Index which targets the highest ESG-rated companies making up 50% of the market capitalization within each GICS sector of the parent MSCI USA Small Cap Index. The ETF comes with an expense ratio of 0.20%.