A new thematic equity ETF has debuted in Europe providing exposure to companies offering goods and services that nourish the human body or benefit the environment.
Omar ElKheshen, CEO of Quikro.
The Cleaner Living ESG-S UCITS ETF has been listed on London Stock Exchange in US dollars (Ticker: DTOX LN) and pound sterling (DTOP LN) as well as on Xetra (DTOX GY) and Borsa Italiana (DTOX IM) in euros.
It is the second ETF to be introduced through a partnership between Mauritius-registered financial services outfit Quikro and European white-label ETF platform HANetf following the October 2020 launch of the Digital Infrastructure & Connectivity UCITS ETF.
According to Quikro, the Cleaner Living theme is rapidly moving into the mainstream as consumers become more conscious of the ingredients and materials used in the foods they eat and the products they surround themselves with on a daily basis.
Cleaner Living seeks to eliminate, wherever possible, artificial chemicals, additives, and ingredients that are deemed to have potentially harmful effects, as well as avoid the materials or technologies that can damage the planet through pollution or depletion of natural resources.
Methodology
The ETF is linked to the Tematica Bita Cleaner Living Sustainability Screened Index which was developed by Quikro and Virginia-based thematic research specialist Tematica. The index is administered and published by Frankfurt-based index calculation agent BITA.
The index selects its constituents from an initial universe of developed market stocks, including American Depositary Receipts, of companies with market capitalizations above $100 million and average daily trading volumes greater than $1m.
An initial round of sustainability filters remove violators of UN Global Compact principles, companies involved in controversial weapons development, and firms generating carbon emissions that are 1.5 standard deviations above their sector mean.
The methodology then harnesses Tematica’s research capabilities to screen for companies deriving at least 80% of their revenue or earnings from the provision of products and services in the ‘Cleaner Living’ sector. Tematica defines the Cleaner Living sector to include five distinct segments: food & dining, health & beauty, building & infrastructure, transportation, and energy.
According to Tematica, by capturing growth across a wider span of clean-living themes, the index reduces its vulnerability to changes in public policy in any one area.
Constituents are equally weighted while capping the weight of any sector at 30%.
The ETF comes with an expense ratio of 0.59% and qualifies as an Article 8 product under the European Union’s Sustainable Financial Disclosure Regulation (SFDR).
Omar ElKheshen, CEO of Quikro, said: “The craze towards cleaner living is not going away. It has become clear that this sentiment has led to a structural shift in our society, as opposed to a short-term fad, and companies are pivoting to capture the changing consumer spending profile through new products. Consumers are becoming much more knowledgeable about the products they are purchasing and making conscious choices towards a cleaner, sustainable lifestyle. Demand for cleaner products and solutions, be they beauty products, or the food that we eat, is evident in almost every aspect of everyday life – when at the supermarket or when purchasing new appliances or vehicles.
“As a result, we’re excited to offer investors access to Europe’s first ETF that tracks these exciting trends towards a cleaner, healthier lifestyle and planet.”
Hector McNeil, co-Founder and co-CEO at HANetf, added: “2021 has been an unprecedented year for HANetf in terms of fund launches. We’re thrilled to be working with Quikro and the Tematica team once again after the successful launch of the Digital Infrastructure and Connectivity UCITS ETF in 2020 by adding the Cleaner Living ESG-S UCITS ETF to our range of thematic and ESG ETFs.”