Credit Suisse Asset Management has launched a new ETF in Europe providing ESG-enhanced exposure to innovative technology and technology-enabled stocks listed in the US.
Valerio Schmitz-Esser, Head of Index Solutions at Credit Suisse Asset Management.
The CSIF MSCI USA Tech125 ESG Blue UCITS ETF has been listed on SIX Swiss Exchange in US dollars (USTEC SW) as well as on Deutsche Börse Xetra (CSYU GY) and Borsa Italiana (USTEC IM) in euros.
Valerio Schmitz-Esser, Head of Index Solutions at Credit Suisse Asset Management, said: “For investors interested in technology, the ESG lens is in our view highly relevant for assessing risk and return. We are committed to providing our clients with sustainable alternatives which help them build strong long-term portfolios.”
Methodology
The fund is linked to the MSCI USA Tech 125 ESG Universal Index which selects its constituents from the MSCI USA Index, a broad representation of US-listed large and mid-cap companies.
The index aims to capture companies developing innovative technologies across a wide range of New Economy segments including internet and digitization, fintech, mobility, robotics & AI, autonomous technology, industrial automation, agricultural biology, gene editing & therapy, and digital healthcare, among many others.
Index provider MSCI identifies companies considered appropriate for these sub-themes based on the frequency of relevant keywords found in their names, business summaries, and annual reports, which, in turn, are mapped to and corroborated with third-party industry classifications.
After identifying potential constituents, MSCI calculates a thematic relevance score for each company based on the proportion of its revenue derived from activities linked to the relevant sub-themes. Any firm with a thematic relevance score below 25% is removed and, from the remaining universe, the methodology selects the 125 largest companies for index inclusion, subject to the ESG screening process detailed below.
MSCI applies its ‘ESG Universal’ approach which first removes companies embroiled in severe ESG-related controversies as well as firms with operations linked to controversial weapons. 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.
Constituents are weighted using a combination of float-adjusted market capitalization and thematic relevance score while also seeking to increase the weight of companies with higher ESG scores as well as those that have displayed progress in improving their ESG score. The index weights are reviewed on a semi-annual basis.
As of the end of January, the index contained 124 constituents. Nearly two-thirds (62.1%) of the total weight was allocated to information technology stocks with the next-largest sector exposures being health care (13.2%), consumer discretionary (11.4%), and communication services. Notable positions included Microsoft (14.1%), Apple (9.9%), Nvidia (7.5%), Amazon (6.2%), and Tesla (3.2%).
The ETF comes with an expense ratio of 0.18%.