Touchstone Investments, an affiliate of the Western & Southern Financial Group, has launched an actively managed ETF that invests in companies developing solutions for the climate transition.
Blake Moore, President and CEO of Touchstone Investments.
The Touchstone Climate Transition ETF (HEAT US) has been listed on Cboe BZX Exchange with an expense ratio of 0.69%.
Sub-advised by Lombard Odier Investment Managers, the fund invests globally and across sectors, targeting three categories of ‘climate transition’ companies: solution providers, transition leaders, and adaptation opportunities.
Solution providers refer to companies that are helping to reduce or capture carbon coming from the use of fossil fuels or avoid emitting carbon by deploying new alternatives.
Transition leaders refer to carbon-intensive industrial companies that are shifting to more sustainable and less carbon-intensive methods of production. These firms typically operate in hard-to-abate industries and their successful transition to a cleaner model is expected to unlock strong competitive advantages as regulations tighten.
Adaptation opportunities refer to companies that benefit from the cost of adapting to climate change. Eligible candidates include infrastructure firms focused on climate compatibility, as well as insurance and financial services companies that are dealing with society’s adaptation to climate change consequences.
From this investment universe, Lombard Odier builds a high-conviction portfolio of approximately 40 to 60 stocks, selecting companies with robust capital efficiency, strong cash generation, and limited dependency on external capital.
Blake Moore, President and CEO of Touchstone Investments, commented: “Touchstone is focused on providing access to world-class, ‘Distinctively Active’ institutional asset management strategies through our mutual fund and ETF offerings. With interest in both thematic and sustainable investing on the rise, this Climate Transition ETF seeks to provide advisers and the investors they serve with an opportunity to better position investment portfolios and meet long-term goals.”
Matt Barry, Vice President of Product Management at Touchstone Investments, added: “Our sub-advised model enables us to find best-in-breed asset managers in a variety of asset classes, and we are excited to partner with a manager who truly understands the opportunities being created by the climate transition. We believe Lombard Odier IM’s forward-looking focus on the climate transition, integrated sustainability and investment research, and disciplined processes provide the differentiated expertise needed to help our clients navigate this theme.”