Nuveen has launched a new actively managed global equity ETF that seeks to capitalize on the risks and opportunities presented by the climate transition.
Jordan Farris, Head of ETF Product at Nuveen.
The Nuveen Global Net-Zero Transition ETF (NTZG US) has been listed on Nasdaq with an expense ratio of 0.55%.
The fund’s portfolio management team consists of Tom Lavia, a Member of Nuveen’s Equities Investment Council; Willis Tsai, Head of International Portfolio Management; and Greg Mancini, co-Head of Global Equity Research. The three portfolio managers have between 18 and 26 years of investment industry experience.
The ETF seeks to outperform the MSCI All Country World Index while demonstrating reduced carbon emissions over time at a faster pace than required by the Paris Climate Agreement.
Paris-aligned strategies typically deliver an immediate 50% reduction in weighted average carbon intensity compared to their benchmarks while aiming for at least a further 7% annual decarbonization going forward, aligning with a trajectory to limit global warming to 1.5°C above pre-industrial levels by 2050.
The fund utilizes three investment avenues to ensure Paris alignment and provide a holistic approach to the climate transition.
Firstly, the ETF invests in climate leaders, defined as companies that are already net-zero, have committed to carbon-reduction plans validated as Paris-aligned, or have credible intentions to reduce their emissions.
Secondly, the fund also seeks out companies providing disruptive technology supporting the climate transition. In this way, investors will receive thematic exposure to firms that stand to benefit from greater global demand for climate mitigation technologies.
Finally, the ETF will also invest in high-carbon emitters where Nuveen believes it can provide stewardship to move these companies closer to meaningful reductions in their emissions, thereby delivering real-world change. Key elements of Nuveen’s stewardship approach include regularly meeting with companies to establish climate strategy expectations, recommending enhancements to existing strategies, monitoring progress against goals, and voting on climate-related shareholder proposals.
Security selection is driven by a rigorous bottom-up approach that seeks out value creators with an attractive valuation or investment catalysts with upside potential.
Jordan Farris, Head of ETF Product at Nuveen, said: “Today, a confluence of scientific conviction, societal consensus, energy security policy, and business practice is all centered on the reality that reducing harmful carbon emissions is absolutely critical to the future of the planet. These forces represent a powerful tailwind for our strategy as more investors prudently realize the urgently needed transition to net-zero will inevitably create market winners and losers.
“Through our engagement process, we will seek to decarbonize the portfolio at a rate faster than that of the market to achieve net-zero carbon ahead of the Paris Agreement 2050 deadline. Importantly, the fund serves as an effective voice for investors who are concerned about climate issues and want to drive change through their investments.”
Amy O’Brien, Global Head of Responsible Investing at Nuveen, added: “Our research shows that nine out of 10 investors want to see the results of their ESG investing. Accordingly, in this strategy, we’ll practice transparent stewardship, including publishing data demonstrating the reduction of emissions, pointing specifically to the companies that are driving progress and continuing to signal our own accountability.”