More Mutual Funds has launched an ETF in Israel providing lower carbon exposure to European equities.
Eli Levy, co-CEO of More Mutual Funds.
The More Sal (4D) Stoxx Europe 600 Low Carbon ETF (MORES5 IT) has listed on the Tel Aviv Stock Exchange and is the country’s first ETF to specifically incorporate a carbon-reduced investment methodology.
Eli Levy, co-CEO of More Mutual Funds, commented, “With a penetration of 20% of renewable energies and ambitious goals to make the continent neutral from carbon emissions by the middle of the century, Europe, in our opinion, is the world leader in the ‘green race’ and will meet its targets by 2050.
“The More Sal (4D) Stoxx Europe 600 Low Carbon ETF integrates as a solution for exposure to European markets. It allows us from the very first stage to offer a product that meets two requirements: market exposure and exposure to companies that adopt a sustainability approach.”
Methodology
The fund is linked to the Stoxx Europe 600 Low Carbon Index which aims to track the risk-return profile of its parent benchmark, the Stoxx Europe 600 Index, while offering a reduction in carbon emissions in the overall portfolio.
The parent Stoxx Europe 600 Index covers large, mid, and small-cap companies from 17 European developed market countries.
Firms operating in the coal ICB supersector are excluded. Stoxx then uses reported and estimated carbon emissions data provided by CDP and ISS ESG to sort constituents within each ICB supersector according to their carbon intensity z-scores. Data used for calculating a firm’s carbon intensity is scope 1 and scope 2 emission data relative to revenue.
Constituents are weighted according to the product of their float-adjusted market cap and their carbon intensity z-scores while capping any individual stock at 5%.
The resulting index has broadly similar exposures compared to its parent. The UK leads the country weightings at 22.0%, followed by roughly equal allocations to stocks from France (17.3%), Switzerland (16.8%), and Germany (14.3%).
Healthcare (16.6%) and industrial goods & services (11.9%) are the top sector exposures with lesser allocations to food, beverage & tobacco (9.0%), and technology (7.0%).