Invesco Adds Emerging Markets ETF to ESG Momentum Suite | ETF Strategy
Invesco strengthened its range of socially responsible equity funds with the launch of the Invesco MSCI Emerging Markets ESG Universal Screened UCITS ETF.
The fund offers a broad exposure to emerging markets while eliminating companies from sectors that do not comply with ESG criteria and favoring companies with solid and improving ESG profiles.
He listed on London Stock Exchange in US dollars (ESEM LN) and pound sterling (ESES LN) and on Xetra in euros (GYE ESGM).
The ETF follows the MSCI Emerging Markets ESG Universal Select Business Screens Index using direct physical replication.
Index is derived from parent MSCI Emerging Markets Index, a preeminent benchmark for the performance of large and mid-cap stock markets in 26 developing countries.
The methodology first excludes issuers that have faced serious ESG controversies (including violations of the United Nations Global Compact) in the past three years, as well as those involved in controversial weapons, conventional weapons, nuclear weapons, tar sands, thermal coal, civilian firearms, recreational cannabis. , or tobacco.
Companies that have an MSCI ESG rating of CCC, the lowest ESG rating by MSCIthe ESG rating scale, are also removed from the selection pool.
Securities that survive this screen are then assigned ESG scores that reflect MSCI’s assessment of the security’s current ESG rating, as well as the trend in that rating, defined as the evolution of the security’s ESG rating over time. time. This combined ESG score is then applied to reweight the eligible securities based on their free float market capitalization weights in the parent index, subject to an individual safety cap of 5%.
The fund comes with an expense ratio of 0.19%.
Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco, said: “As risk appetite has increased due to the economic recovery, we are seeing some investors positioning their portfolios in lower areas. high increase. Flows to emerging market ETFs during the first half of the year were broadly equal to those to Europe and followed only those to global and US equities. At the same time, we see that 44% of all net flows have gone to ESG products, with over $ 1.2 billion in our MSCI ESG Universal Screened ETF lineup. We believe these trends may continue as many emerging markets are well positioned economically as the world emerges from the pandemic and investors appreciate the potential benefits that ESG strategies can offer their portfolios. “
Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, added: “When we talk to investors about what is most important to them when selecting responsibly invested funds, performance and commitment are normally at the top of their list. We can meet these demands with passive ETFs by choosing the right benchmark and putting in place the people and systems to follow it closely, and following a strong engagement process. We vote the shares held by our passive ETFs in accordance with the largest active holder of those shares within the Invesco group. This combined vote can give us a much bigger voice on key ESG decisions. “
Invesco offers seven other ETFs that leverage MSCI’s “ESG Momentum” approach. The rest of the funds in the suite target developed global, US, European, European excluding UK, Eurozone, Japanese, and Asia-Pacific developed stock markets excluding Japan. ETFs have expense ratios between 0.09% and 0.19% and collectively house over $ 1.3 billion in assets.