UBS Asset Management has launched a new ETF providing ESG-enhanced exposure to dividend-paying companies listed in Switzerland.
The UBS ETF – MSCI Switzerland IMI Dividend ESG ETF (CHDIV SW) has been listed on SIX Swiss Exchange in Swiss francs.
The fund is linked to the MSCI Switzerland IMI High Dividend Yield ESG Low Carbon Select Index which selects its constituents from an initial universe of large, mid, and small-cap stocks listed in Switzerland.
The methodology first removes companies embroiled in severe ESG-related controversies and firms with business activities linked to controversial weapons, civilian firearms, tobacco, fossil fuel extraction, and thermal coal power.
Each company is then assigned an ESG score on a seven-point scale based on the most relevant ESG factors by industry and risk exposure. Companies with the lowest rating of CCC are also removed.
The index then screens for dividend-paying firms. To remove lower-quality dividend payers as well as potential dividend traps, the methodology excludes companies with negative 5-year dividend-per-share growth rates and firms with dividend payout ratios in the top 5% of the initial universe.
The remaining constituents are weighted using an optimization process that seeks to increase the index’s dividend yield by 30% relative to the initial universe while also boosting the overall ESG score by 10% and reducing the aggregate carbon emissions and exposure to fossil fuel reserves by 30% each. The optimization also includes constraints on sector and constituent deviations relative to the initial universe in a bid to enhance diversification and limit tracking error.
The ETF comes with an expense ratio of 0.20%.