Good News For Investors: UBS AM Introduces Low Carbon ETF

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Holy moly! Investors, get ready to make your portfolios greener — UBS Asset Management has just launched its first Low Carbon ETF!

UBS Asset Management has introduced an exchange-traded fund (ETF) that follows Australian stocks while incorporating a low carbon bias.

This groundbreaking move from the world’s largest wealth manager brings ESG and sustainable investing to a new level. With this exchange-traded fund (ETF), investors have access to a low-carbon portfolio of local equities while still benefiting from the long-term returns of the ASX 200.

ESG Criteria: Exclusions and Inclusions in AUESG Index

The UBS ETF MSCI Australia ESG Universal Low Carbon Select UCITS ETF (AUESG) has been listed on the Six Swiss Exchange, featuring a total expense ratio (TER) of 0.43%.

AUESG tracks the MSCI ESG Universal Low Carbon Select 5% Issuer Capped Total Return Net index, comprising large and mid-cap Australian stocks known for their strong environmental, social, and governance (ESG) characteristics.

Companies with an MSCI ESG rating below ‘B’ and controversies score below one are excluded from the index, along with those involved in sectors such as weapons, civilian firearms, nuclear weapons, tobacco, thermal coal power, and fossil fuel extraction.

“Incorporating ESG screens into equity portfolios is one of the many ways investors can contribute to a greener economy and build sustainable businesses,” said UBS Asset Management’s Head of ETFs in Australia, Anupam Singh.

UBS ETF Classified as Article 8 under SFDR for Sustainable Finance

The index ranks companies based on carbon emission intensity, with the top 5% removed. However, no sector will be reduced by more than 30%.

“This ETF is an important milestone for UBS Asset Management, representing our long-term commitment to sustainable investing,” Singh added.

MSCI applies an ESG re-weighting factor to the parent index using its ESG rating criteria, with individual stocks capped at 5%. This ETF is classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

It follows the recent launch of UBS ETF MSCI Switzerland IMI Dividend ESG UCITS ETF (CHDIV) with a TER of 0.20%.

Last month, UBS introduced the UBS Carbon Compensated Gold ETF (GLDC02) on the Six Swiss Exchange, which carries a fee of 0.30%.

The launch of this green ETF by UBS AM underscores the growing importance of ESG investing in financial markets the world over. 

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