L&G cross-lists US ‘Responsible Exclusions’ ETF on Borsa Italiana

Jan 28th, 2020 | By | Category: Equities

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Legal & General Investment Management (LGIM) has cross-listed its L&G US Equity (Responsible Exclusions) UCITS ETF on Borsa Italiana.

L&G cross-lists US ‘Responsible Exclusions’ ETF on Borsa Italiana

LGIM has cross-listed the L&G US Equity (Responsible Exclusions) UCITS ETF on Borsa Italiana.

The fund, which was launched in December 2019 in partnership with index boutique Foxberry, provides exposure to US equities whilst taking into account environmental, social and governance (ESG) factors.

It is linked to the Foxberry Sustainability Consensus US Total Return Index which selects its constituents based on the insights of a committee of sustainability experts drawn from major asset owners and managers (including L&G and leading Finnish pension fund Varma).

Constituents are weighted according to free-float market capitalization, subject to a maximum weight per stock of 20%.

The committee follows a series of exclusion guidelines and other specifications but may exercise discretion in its determinations. It may also modify the requirements of such guidelines to evolve with changing conditions and views of impact investing.

The exclusion guidelines, which are applied to a universe that broadly corresponds to the largest 500 companies listed in the US, consider environmental, governance, sustainability, equality, and ethical concerns as well as a company’s alignment with the UN sustainable development goals and business-practice norms.

Stocks are automatically excluded if they operate in the tobacco or controversial weapons industries or have exposure to coal (25%+ of revenues) or other so-called stranded assets (e.g. hydrocarbon resources). The ten companies with the highest CO2 emission intensity are also excluded.

Proponents of a committee-based approach contend that these indices (and thus portfolios linked to them) can react more quickly to market developments and evolving sustainability considerations than systematic rules-based indices, and, similarly, can arrive at a consensus position on matters of responsible investment or make judgement calls or take active decisions in areas where ESG data is sporadic, erratic, spurious and/or limited in quality or scope.

The new share class trades on Borsa Italiana in euros under the ticker RIUS IM. Income is accumulated. The fund is also listed on the London Stock Exchange where it trades in pound sterling (RIUG LN) and US dollars (RIUS LN).

The ETF comes with a total expense ratio of 0.12% and has $570m in AUM, the bulk of which is seed capital courtesy of Varma.

It is the second LGIM ESG-focused fund launched in collaboration with Foxberry following the introduction of the L&G Europe Equity (Responsible Exclusions) UCITS ETF in September 2019. This fund is also listed on Borsa Italiana, trading in euros under the ticker RIEU IM.

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