UBS Asset Management has launched a new ETF providing broad exposure to the Swiss equity market while adjusting for environmental, social, and governance (ESG) factors.
The UBS SPI ESG ETF provides ESG-weighted exposure to the SPI, one of Switzerland’s foremost equity indices.
The UBS SPI ESG ETF (SPISI SW) has listed on SIX Swiss Exchange and is traded in Swiss francs.
The fund is linked to the SPI ESG Weighted (Total Return) Index which applies sustainability selection and weighting criteria to the Swiss Performance Index (SPI) universe, one of Switzerland’s most closely followed barometers of equity market performance.
The SPI is a comprehensive benchmark consisting of all SIX-listed stocks, excluding investment companies, with free-floats above 20%.
The ESG index methodology excludes companies deriving more than 5% of their revenue from ‘disputed sectors’, namely adult entertainment, alcohol, defense, gambling, genetic engineering, nuclear energy, coal, oil sands, and tobacco.
Each company is then assigned an ESG Impact Rating from Swiss sustainability ratings agency Inrate. The ESG Impact Rating indicates the environmental and social impact a company has through its products and practices, as well as its willingness to address these issues.
Ratings range on a scale from A to D with companies scoring below C+ excluded from the selection pool.
The remaining constituents are weighted using a modified float-adjusted market capitalization approach that tilts to companies with superior ratings. The index is reconstituted annually and rebalanced quarterly.
As of January month-end, the index contained 139 stocks compared to 214 for the parent SPI. Exposure to the healthcare sector was slightly overweighted (38% vs. 35%), while the weight of the consumer goods sector was slightly underweighted (21% vs. 25%). The financials and industrials sectors each accounted for approximately 15%, broadly in line with the regular SPI.
Mirroring the SPI, the index is significantly concentrated in the top three stocks: Nestle (17% vs. 19%), Roche (16% vs. 14%), and Novartis (15% vs. 13%). The next largest positions are Zurich Insurance and ABB, each at 4%.
The fund comes with a management fee of 0.15% matching the cost of UBS’s regular counterpart, the UBS SPI ETF (SPICHA SW), which houses CHF 740 million ($820m) in assets.
Income is capitalized within the portfolio.