Amundi has expanded its line-up of socially responsible ETFs with the introduction of a Japanese equity strategy.

Amundi has added a Japanese equity fund to its line-up of socially responsible ETFs.

The Amundi Index MSCI Japan SRI UCITS ETF has listed on Deutsche Börse Xetra in euros (JARI GY) and is expected to cross-list on Euronext Paris (JARI FP) in the near future.

The fund is linked to the MSCI Japan SRI Filtered ex Fossil Fuels Index which is derived from the MSCI Japan Index universe of large- and mid-cap stocks.

The index methodology applies various climate change and values-based exclusions before utilizing a ‘best-in-class’ selection approach to determine consituents.

Companies involved in controversial weapons, civilian firearms, tobacco, adult entertainment, alcohol, gambling, genetically modified organisms, nuclear power, and fossil fuels, as well as those embroiled in severe ESG-related controversies, are all removed from the selection pool.

Using insights from MSCI ESG Research, the remaining constituents are then assigned an ESG score between AAA and CCC based on the most relevant ESG factors by industry and risk exposure. Stocks with ESG ratings below BBB (equivalent to average) are not eligible for selection.

The methodology then selects the companies with the highest ESG ratings that make up 25% of the market capitalization in each GICS-defined sector of the parent MSCI Japan. Constituents are weighted by float-adjusted market capitalization, subject to a 5% cap per security.

The resultant index has 68 constituents, compared to 320 in its parent, although, by design, sector allocations are broadly similar. The largest sector weights are consumer discretionary (18.2%), industrials (17.0%), information technology (14.7%), communication services (14.1%), and healthcare (12.3%).

Index concentration is higher with top ten stocks by weight accounting for a combined 43.8% weight versus 20.7% in the MSCI Japan.

The ETF comes with an expense ratio of 0.18%. Income is capitalized within the fund.

Paris-based Amundi joins several other issuers in Europe offering socially responsible exposure to Japan. These include UBS, DWS, HSBC, and BlackRock – the latter offering a roster of three ETFs deploying different ESG approaches to Japan. These funds’ expense ratios range from 0.15% to 0.22% with the BlackRock iShares ETFs being the cheapest.