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UBS AM launches the first UCITS ETF that applies the criteria of the Climate Transition Benchmark to the universe of the S&P 500

UBS AM launches the first UCITS ETF that applies the criteria of the Climate Transition Benchmark to the universe of the S&P 500

The underlying index portfolio applies a decarbonisation pathway with an initial reduction in carbon intensity of 30% and subsequently a 7% year-on-year self-decarbonisation thereafter.
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2 APR, 2024

By RankiaPro Europe


UBS AM announced today the launch of the first UCITS ETF that replicates a climate transition index based on the S&P 500 index universe. The UBS S&P 500 Climate Transition ESG UCITS ETF is designed for those investors who require exposure to large-cap US equities with a zero net emissions overlay combined with an overall ESG profile improvement.

The S&P 500 index is the flagship index for exposure to US equities, so this ETF opens the possibility for investors who wish to maintain the S&P 500 universe while simultaneously applying a CTB overlay.

Investment Process

The index used by the fund employs a comprehensive two-phase process to select and weight portfolio components so that they are collectively compatible with the transition to a low-carbon and climate-resilient economy.

The first step defines an eligible ESG universe by applying exclusions of business activities that include companies involved in violations of the UN Global Compact or that exceed revenue thresholds in activities such as controversial weapons, military contracting, small arms, tobacco, coal, thermal coal, and oil sands or bituminous sands.

The second step is designed to help investors manage climate transition risks and seize opportunities offered by climate change. This step uses an optimizer that allows an initial reduction of carbon intensity by 30%, followed by an annual reduction trajectory of 7%. The resulting S&P 500 Climate Transition Base ESG index offers a solution aligned with net zero emissions. In addition, the index provides an improvement in the overall ESG score compared to the benchmark index.

The index aims to keep the tracking error limited, minimizing the active participation of sectors, industries, and components. It also ensures broad representation of the underlying market with 369 components.

The UBS S&P 500 Climate Transition ESG ETF is available in USD, as well as in other currency hedged classes (EUR and GBP). It will be listed on major European exchanges, such as the London Stock Exchange, Xetra, Borsa Italiana, and SIX Swiss Exchange.

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