Amundi has expanded its socially responsible investing (SRI) suite with the launch of the Amundi Index MSCI Emerging Markets SRI – UCITS ETF (EMSRI FP) on Euronext Paris.

Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta.

The fund is linked to the MSCI Emerging Markets SRI Index which harnesses data from MSCI’s ESG Research team to provide SRI-focused exposure to the parent MSCI Emerging Markets Index.

The methodology first excludes companies involved in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs, and adult entertainment.

The remaining constituents are then assigned an ESG rating from MSCI ESG Research which indicates its ability to deal with ESG risks relative to sector peers. Firms with ratings below average are excluded.

The process then seeks to form a best-in-class index with risk characteristics that are similar to the parent universe. It does this by selecting companies with the highest ESG ratings that make up approximately 25% of the total market capitalization of each sector. Stocks are weighted by free float-adjusted market capitalization.

Historically, taking the ESG investment route has proven to be a rewarding strategy in emerging markets: Over the past five years, the MSCI EM SRI Index has delivered an annualized return of 7.6% with an annualized standard deviation of 14.2%, comparing favourably to the 5.2% annualized return and 15.4% annualized standard deviation for the parent MSCI Emerging Markets Index over the same period.

Source: MSCI.

EMSRI comes with a total expense ratio (TER) of 0.25%, making the fund the most competitive ETF in Europe tracking the MSCI EM SRI Index.

Fannie Wurtz, Managing Director, Amundi ETF, Indexing and Smart Beta, commented, “This new listing follows on from Amundi’s ambitious three-year ESG action plan announced last October and demonstrates our commitment to meet investors’ rising demand for ESG passive solutions, at competitive pricing.”

BlackRock previously offered the cheapest ETF in this space – the iShares MSCI EM SRI UCITS ETF has a TER of 0.35% and houses $290 million in assets under management. Its largest competitor, however, is the UBS MSCI Emerging Markets Socially Responsible UCITS ETF which tracks an issuer-capped version of the MSCI EM SRI Index and has over $570m in AUM. Its TER is notably higher though at 0.53%.

The new launch complements Amundi’s existing SRI range which includes three ETFs based on the MSCI Europe Index, MSCI USA Index, and MSCI World Index. Each ETF comes with a TER of 0.18%, and collectively the funds house around $100m in AUM.