RBC iShares has expanded its line-up of sustainability-focused ETFs with the launch of three new equity funds powered by MSCI’s ‘ESG Leaders’ investment approach.
RBC iShares has launched three new ETFs following MSCI’s ‘ESG Leaders’ investment approach.
Listed on the Toronto Stock Exchange, the funds provide broad coverage of Canadian, US, and developed ex-North America equity markets while selecting only the best ESG performers from each sector.
They are the iShares ESG MSCI Canada Leaders Index ETF (XCLR CN), which comes with a management fee of 0.15%; the iShares ESG MSCI USA Leaders Index ETF (XULR CN) at 0.20%; and the iShares ESG MSCI EAFE Leaders Index ETF (XDLR CN) at 0.25%.
Steven Leong, Head of iShares Product, BlackRock Canada, said: “As part of our ongoing commitment to help clients incorporate sustainability into their portfolios, these new funds deliver more choices to help clients meet their own individual sustainability and portfolio objectives. RBC iShares has the broadest range of sustainable ETF strategies in Canada, and these funds can be used as sustainable equity building blocks for the core of a portfolio.”
Methodology
The MSCI ESG Leaders Indices that underlie the ETFs are constructed from MSCI’s headline single-country and regional benchmarks – MSCI Canada, MSCI USA, and MSCI EAFE – which capture large and mid-cap representation across their respective markets.
Using insights from MSCI ESG Research, the methodology first excludes companies with business activities in the alcohol, tobacco, gambling, nuclear power, and weapons industries as well as firms that are embroiled in severe ESG-related controversies.
The remaining constituents are assigned an ESG score between AAA and CCC based on the most relevant ESG factors by industry and risk exposure. The rating process aims to identify ESG leaders and laggards within each industry.
The indices then select the securities with the highest ESG scores while targeting a 50% sector representation versus their parent universes. Firms with ratings below BB (lower-average) are not eligible for inclusion. Chosen constituents are weighted by free float-adjusted market cap subject to single issuer caps to ensure diversification.
Reconstitution and rebalancing occur annually in May.