AXA Investment Managers (AXA IM), the investment management arm of French insurance giant AXA, has launched a new ETF in Europe providing US equities exposure while aligning with the carbon reduction goals of the Paris Agreement.
AXA IM now offers three Paris-aligned ETFs covering US equities as well as USD and EUR corporate credit markets.
The AXA MSCI USA Equity PAB UCITS ETF has been listed on Deutsche Börse Xetra in euros (AIUT GY) and US dollars (AIUU GY), as well as on Borsa Italiana in euros (AIUU IM).
It is also expected to list on SIX Swiss Exchange in US dollars (AIUU SW) in the coming days.
The fund is linked to the MSCI USA Climate Paris Aligned Index which is based on the parent MSCI USA Index universe of large and mid-cap stocks listed in the US.
The index construction process begins by removing companies that are embroiled in severe ESG-related controversies or have business operations linked to controversial weapons, tobacco, oil & gas, or thermal coal mining.
The remaining securities are then weighted using an optimization process that is designed to meet the requirements of EU Paris-Aligned Benchmarks (PAB) while also pursuing opportunities arising from the transition to a low-carbon economy.
MSCI harnesses a diverse range of data and analytical tools to aid in index construction including scope 1, 2, and 3 carbon emissions, green revenues, and the index provider’s own proprietary low carbon transition score and climate value-at-risk measures.
The index offers an immediate 50% reduction in weighted average carbon intensity as well as a further 10% annual decarbonization going forward, aligning with a trajectory to limit global warming to 1.5°C by 2050.
In addition to the above primary objectives, the index aims to achieve secondary objectives such as maximizing exposure to sustainable energy providers, increasing the weight of companies with clear carbon reduction targets, minimizing fossil fuel exposure, reducing climate value-at-risk by 50%, and maintaining a modest tracking error relative to the parent universe.
The ETF comes with a maximum expense ratio of 0.20% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
While the fund represents AXA’s first Paris-aligned equity ETF, the firm also offers two actively managed Paris-aligned fixed income ETFs targeting USD and EUR corporate credit markets. The AXA IM USD Credit PAB UCITS ETF and AXA IM Euro Credit PAB UCITS ETF have expense ratios of 0.18% and 0.20%, respectively.