Amundi has expanded its suite of ETFs designed to help tackle climate change with a fund focused on the Japanese stock market.
The ETF provides exposure to Japanese equities while aligning with a 1.5ºC temperature rise scenario.
The Amundi MSCI Japan ESG Climate Net Zero Ambition CTB UCITS ETF has been created by transitioning the firm’s straightforward Japanese equity ETF to a new index incorporating climate investment criteria.
The fund, which houses $800 million in assets, is now linked to the MSCI Japan ESG Broad CTB Select Index which satisfies the requirements of EU Climate Transition Benchmarks (EU CTB).
The index begins its construction process from the parent MSCI Japan universe which consists of large and mid-cap stocks, covering approximately 85% of the total market capitalization in Japan.
The methodology removes companies embroiled in severe ESG and environmental controversies as well as firms with business operations in controversial weapons, tobacco, thermal coal, oil sands, nuclear weapons, and arctic oil & gas.
The index then selects and weights its constituents from the remaining universe using an optimization process that seeks to satisfy various ESG-related objectives while maintaining a tracking error relative to the parent MSCI Japan of less than 0.75%.
The objectives include maximizing the overall ESG score, reducing total carbon emissions by at least 30%, reducing potential emissions by at least 30%, and setting a decarbonization trajectory going forward of at least 7% per annum, aligning with a scenario to limit global warming to less than 1.5ºC above pre-industrial levels.
As of the end of December 2022, the index contained 223 stocks compared to 237 for the initial universe.
Stocks from the industrials and consumer discretionary sectors each accounted for roughly a fifth of the index weight with the next-largest sector exposures being financials (14.5%), information technology (14.3%), and health care (10.8%).
Notable positions included Toyota (4.7%), Sony (3.4%), Mitsubishi UFJ (2.7%), Keyence (2.4%), and Sumitomo Mitsubishi (2.2%).
The ETF comes with an expense ratio of 0.45% and is classified as Article 8 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
The fund is available to trade on Deutsche Börse Xetra (J1GR GY), Euronext Paris (CJ1 FP), and Euronext Milan (CJ1 IM) in euros.
Amundi’s suite of climate-focused ETFs includes a further six funds that adhere to EU CTB requirements and target stocks from global developed, North American, US, European, eurozone, and emerging market universes.