Global X adds Solar, AgTech, and SuperDividend UCITS ETFs

Feb 22nd, 2022 | By | Category: Equities

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Global X has expanded its ETF offering in Europe with the introduction of three new funds.

Global X adds Solar, AgTech, and SuperDividend UCITS ETFs

Morgane Delledonne, Director of Research in Europe for Global X.

Two of the new products are part of the firm’s thematic growth suite, providing exposure to the investment themes of solar energy and agricultural technology & food innovation.

The third is an income-focused fund delivering access to some of the highest dividend-yielding equities globally.

Listed on London Stock Exchange in US dollars and pound sterling, as well as on Deutsche Börse and Borsa Italiana in euros, the new funds are the Global X Solar UCITS ETF (RAYZ), the Global X AgTech & Food Innovation UCITS ETF (KROP), and the Global X SuperDividend UCITS ETF (SDIV).

Solar & AgTech

According to Global X, the interlinked goals around infrastructure, climate, and sustainability is drastically changing our relationship with the physical environment.

The transition to renewables like solar energy will play a crucial role in decarbonization efforts over the coming decades, while the combination of population growth, a rising middle class in emerging markets, and more frequent extreme climate events underscore the need for technologies that increase agricultural productivity as well as mitigate food insecurity.

Morgane Delledonne, Director of Research in Europe for Global X, said: “Renewable energy has climbed as a portion of total global energy production over the past decade and its growth will need to accelerate significantly in the coming decades to meet net-zero emissions goals. In addition, the interconnected challenges of climate change, resource scarcity, and global population growth require reimagining how we approach food.

“Global X is leveraging its thematic expertise to offer investors access to two innovative themes: advancements to solar energy technologies and innovation in the agriculture and food industries.”

RAYZ gains its exposure to the solar energy theme by tracking the Solactive Solar v2 Index.

The index selects its constituents from an initial universe of developed and emerging market stocks with market capitalizations greater than $200 million and average daily trading volumes above $2m.

An initial ESG screen removes any company that is a proven UN Global Compact violator as well as firms deriving significant revenue from controversial industries including thermal coal and oil & gas.

Security selection is driven by Solactive’s proprietary natural language processing algorithm, called ARTIS, which identifies firms linked to a specific theme by screening publicly available information such as financial news, business profiles, and company publications for appropriate keywords.

With reference to the solar theme, the algorithm is programmed to identify companies with business operations linked to solar energy materials, solar energy systems and components, solar power production, solar technology, and solar installation, integration, and maintenance.

Once ARTIS has created a list of potential constituents, the index selects the largest pure-play companies (those deriving at least 50% of their total revenue from solar energy business activities), up to a maximum of 50 stocks.

Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 8% and aggregate caps of 15% on all Russia-listed stocks and 40% on all stocks with weights above 4.5%.

The index is reconstituted and rebalanced semi-annually with buffer rules helping to limit unnecessary turnover.

KROP, meanwhile, is linked to the Solactive AgTech & Food Innovation v2 Index.

The index follows a similar approach, harnessing insights from ARTIS to identify companies globally with business operations linked to precision agriculture, agricultural robotics and automation, controlled environment agriculture, agricultural biotechnology, protein & dairy alternatives, and food waste reduction.

The methodology also selects the largest pure-play companies, up to a limit of 20 stocks each within the sub-themes of agricultural technology and food innovation. The index may also include pre-revenue firms, as well as diversified firms (entities deriving less than 50% of their revenue from relevant activities) to satisfy a minimum constituent count of 15 stocks within each sub-theme.

Constituents are also weighted by float-adjusted market capitalization subject to a single stock cap of 12% and aggregate caps of 15% on pre-revenue and diversified stocks and 15% on all Russia-listed stocks.

Both RAYZ and KROP come with expense ratios of 0.50%.

SuperDividend

Global X notes that the firm’s SuperDividend strategy may serve investors looking to supplement their portfolios with income amid economic uncertainty, rising inflation, and hawkish central bank policies.

“High dividend-paying stocks have historically demonstrated the potential to deliver both high income as well as the opportunity to grow one’s principal, potentially increasing a portfolio’s yield,” added Delledonne. “The Global X SuperDividend UCITS ETF accesses some of the highest dividend-yielding equity securities, resulting in potential yields that may exceed other high dividend ETFs. Global X is thrilled to bring SDIV to European investors as the firm’s first Income UCITS ETF.”

The ETF tracks the Solactive Global SuperDividend v2 Index which begins with an initial universe of developed and emerging market stocks, excluding those listed in China and India, with market capitalizations above $500m and average daily trading volumes greater than $1m.

The universe is first screened for stocks with dividend yields between 6% and 20% that have a stable or favourable dividend outlook. The 100 highest dividend-yielding equities from this reduced pool are selected for index inclusion.

Constituents are equally weighted. The index is reconstituted and rebalanced annually with buffer rules helping to limit unnecessary turnover.

SDIV comes with an expense ratio of 0.45%.

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