BlackRock has introduced a new series of sustainable investing ETFs, labeled ‘ESG Advanced’, on Nasdaq.
BlackRock’s new ESG Advanced ETFs are designed to offer robust sustainability profiles.
The ETFs provide exposure to companies with higher ESG scores while also applying extensive business activity screens.
The first two ETFs in the series listed on Thursday and target large- and mid-cap stocks listed in the US or in developed markets globally excluding North America.
They are the iShares ESG Advanced MSCI USA ETF (USXF US) linked to the MSCI USA Choice ESG Screened Index, and the iShares ESG Advanced MSCI EAFE ETF (DMXF US), linked to the MSCI EAFE Choice ESG Screened Index.
They come with fees of 0.10% and 0.12% respectively.
The underlying indices screen their parent MSCI equity universes to exclude companies with business operations in adult entertainment, alcohol, gambling, tobacco, genetically modified organisms, controversial weapons, nuclear weapons, conventional weapons, civilian firearms, for-profit prisons, and predatory lending.
Additionally, companies with significant revenue exposure to palm oil, nuclear power, or fossil fuels, as well as firms that are embroiled in ESG-related controversies are also removed.
The remaining stocks are then assigned ratings from MSCI ESG Research that indicate how well each company manages key ESG issues relative to industry peers. Firms with ratings below BBB (average) are excluded.
Constituents are weighted by float-adjusted market capitalization, and the index is rebalanced on a quarterly basis.
A third ETF, the iShares ESG Advanced Total USD Bond Market ETF (EUSB US), scheduled to list 25 June, tracks an index composed of US dollar-denominated bonds that are rated either investment-grade or high-yield from issuers with favourable ESG ratings, while screening for involvement in controversial activities. It will have a TER of 0.12%.
The fourth ETF in the series, the iShares ESG Advanced MSCI EM ETF (EMXF US), is scheduled to list on 3 September. It will apply the same methodology to a universe of emerging market stocks and come with a TER of 0.18%.
Carolyn Weinberg, Managing Director and Global Head of Product for iShares, said, “The significant acceleration of sustainable index investing has been driven by four forces: an acceptance that sustainable characteristics are consequential to returns, better data is leading to better indexes, sustainable ETFs are generally low cost, and an expanding universe of fund options are enabling investors to construct sustainable portfolios with ESG goals alongside traditional risk and reward objectives. Our new funds give investors new opportunities to efficiently access ESG investing.”
Diana Tidd, Head of Index at MSCI, added, “MSCI has been a leader in sustainable indexes for 30 years and, over that time, we have witnessed increasing demand from investors to incorporate ESG considerations into their investment decision making process. Using transparent, informative ESG research and analysis, our wide range of indexes aim to help institutional investors seeking to achieve their sustainable investing goals.”