Amundi builds out responsible ETF range

Sep 29th, 2020 | By | Category: Equities

Paris-based Amundi has expanded its responsible investment offering with the launch of two new ETFs, providing exposure to emerging market and global developed equities, that sit within its ‘ESG Universal’ and ‘Paris Aligned’ ranges.

Emerging Market ESG ETFs

The fund provides broad exposure to emerging market equities while tilting towards companies with robust and improving ESG profiles.

Fannie Wurtz, Head of ETF, Indexing and Smart Beta at Amundi, said, “We are pleased to enhance our range of responsible ETFs, meeting growing demand from investors for sustainable ETFs to implement cost-effective ESG and climate-positive portfolios.”

ESG Universal

The issuer’s ESG Universal ETFs are linked to MSCI indices and offer broad market exposure with ESG-based exclusions and reweightings.

The Amundi MSCI Emerging ESG Universal Select UCITS ETF has listed on Xetra in euros (SBIM GY) and is set to list on Euronext Paris (SBIM FP) in the near future.

The fund tracks the MSCI Emerging Markets ESG Universal Select Index which is derived from the MSCI Emerging Markets Index, a widely followed barometer of emerging markets equity performance covering large- and mid-cap stocks across 26 developing countries.

With nearly 1,400 constituents, the MSCI EM index covers approximately 85% of the free float-adjusted market capitalization in each country. China A-shares are currently added at a 20% partial inclusion factor.

The ESG methodology first excludes producers of controversial weapons, tobacco or thermal coal, violators of international norms, and companies embroiled in severe ESG-related controversies.

The remaining constituents are then re-weighted using scores from MSCI ESG Research that indicate how well a company manages key ESG issues relative to industry peers. The approach increases the weights of firms with more robust ESG profiles while also favouring companies that have improved their profile since the previous evaluation.

The index is notably underweight China (36.8% vs. 42.5% in the parent index) and overweight Taiwan (14.0% vs. 12.5%), South Korea (12.1% vs. 11.5%), and India (10.0% vs. 8.3%).

With reference to sector exposures, the index is overweight financials (21.8% vs. 19.8%) and information technology (20.2% vs. 17.5%) and underweight consumer discretionary (16.8% vs. 19.8%). The next-largest sector exposures are broadly in line with the parent – communication services (12.1%), consumer staples (6.4%), and materials (5.6%).

The ETF comes with an expense ratio of 0.20%.

Amundi debuted its ESG Universal suite earlier this year in June with the introduction of four ETFs targeting global developed, US, European, and eurozone equity markets:

Amundi MSCI World ESG Universal Select UCITS ETF (SBIW GY) (TER 0.18%)
Amundi MSCI USA ESG Universal Select UCITS ETF (SBIU GY) (TER 0.15%)
Amundi MSCI Europe ESG Universal Select UCITS ETF (SBIE GR) (TER 0.15%)
Amundi MSCI EMU ESG Universal Select UCITS ETF (SBIZ GY) (TER 0.15%)

Paris Aligned

The Amundi MSCI World Climate Paris Aligned PAB UCITS ETF (PABW FP) has listed on Euronext Paris in euros.

The fund tracks the MSCI World Climate Change Paris Aligned Select Index which is based upon the parent MSCI World Index of large- and mid-cap stocks from 23 developed markets globally.

The methodology screens out firms with activities related to controversial weapons, tobacco, coal, and fossil fuels. Additionally, companies that are non-compliant with international ESG standards such as the United Nations Global Compact Principles are also removed.

An optimization process then reweights the remaining constituents so as to reduce the total carbon intensity of the index by 50%, instantly aligning it with the Paris Accord objective to cut emissions by 50% by 2030. The optimization process also seeks to minimize the deviations in constituent weights relative to the parent universe. Furthermore, the index strives for at least a 7% annual decarbonization moving forward.

The fund comes with an expense ratio of 0.25%.

Amundi’s Paris-Aligned ETFs also debuted in June. The other two funds in the suite provide exposure to European (MSCI Europe) and eurozone (Euro Stoxx) equities:

Amundi MSCI Europe Climate Paris Aligned PAB UCITS ETF (PABE FP) (TER 0.18%)
Amundi Euro iStoxx Climate Paris Aligned PAB UCITS ETF (PABZ FP) (TER 0.18%)

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