SSGA introduces first fossil fuel free S&P 500 ETF

Dec 2nd, 2015 | By | Category: Equities

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State Street Global Advisors (SSGA), the asset manager behind the SPDR range of exchange-traded funds, has announced the listing of the SPDR S&P 500 Fossil Fuel Free ETF (SPYX).

SSGA introduces first fossil fuel-free S&P 500 ETF

SSGA’s fossil fuel free ETF offers investors access to S&P 500 companies with reduced exposure to the risks associated with climate change.

This new addition to SSGA’s environmental, social and governance (ESG) line-up is designed to help investors seeking to eliminate fossil fuel reserves from their portfolio while maintaining exposure to the core of the S&P 500 Index.

According to SSGA, a growing number of endowments, pension funds and other institutions are adapting their investment portfolios to accommodate for the risks associated with climate change. SPYX is a potential solution for investors who want to divest from fossil fuel reserves, whether due to concerns over climate change or from financial and investment motives.

“Motivated by concerns surrounding climate change, a growing number of our clients are seeking solutions that can help them divest from fossil fuel reserves while maintaining their strategic asset allocations,” said James Ross, executive vice president and global head of SPDR Exchange Traded Funds at SSGA. “With the launch of SPYX, investors may be able to divest their US large cap allocations from fossil fuel reserves while benefitting from the liquidity, transparency and convenience of an ETF.”

The SPDR S&P 500 Fossil Fuel Free ETF (SPYX) was developed with the support of the Natural Resources Defense Council (NRDC) to meet the needs of climate conscious investors. NRDC is a cornerstone investor in the fund, having found it to be an effective tool to invest in S&P 500 companies that do not own fossil fuel reserves.

“SPYX, which is the first S&P 500 Fossil Fuel Free ETF, is an important addition to State Street’s $186.12bn of ESG investment strategies, which we began managing in 1986,” said Christopher McKnett, managing director and head of Environmental, Social and Governance at SSGA. “SPYX will allow climate aware investors the potential to match their investment strategy and financial interests with their environmental values.”

The SPDR S&P 500 Fossil Fuel Free ETF seeks to track the performance of the S&P 500 Fossil Fuel Free Index. The Index measures the performance of companies in the S&P 500 Index that are “fossil fuel free,” which are defined as companies that do not own fossil fuel reserves. For purposes of the composition of the Index, fossil fuel reserves are defined as economically and technically recoverable sources of crude oil, natural gas and thermal coal but do not include metallurgical or coking coal, which are used in connection with steel production.

In constructing the index, the initial universe of stocks is screened to exclude companies with any ownership in fossil fuel reserves, including for third party and in-house power generation, as determined by publicly available information. The Index includes 475 securities as of 30 September 2015.

The SPDR S&P 500 Fossil Fuel Free ETF has been listed on the NYSE Arca and carries a gross expense ratio of 0.25% and a net expense ratio of 0.20%.

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