As market turbulence tests the resilience of portfolios, BlackRock is broadening its range of sustainable exchange traded funds (ETFs) with three new products for investors looking to manage long term risks relating to environmental, social and governance (ESG) factors. The launches represent the latest development in BlackRock’s commitment to making sustainability its standard for investing, and provide clients with a growing set of options to invest sustainably.
Investors are turning to iShares ETFs to access markets and make portfolio allocations quickly and cost-effectively amid market uncertainty, and the trend towards sustainability continues unabated. Global sustainable ETF industry attracted USD5.7 billion in February alone, USD1.2 billion of which came last week.
In January, BlackRock committed to doubling its offering of iShares ESG ETFs and index funds by the end of 2021. Two of the new ETFs are ESG equivalents of existing flagship IShares UCITS ETFs. They broaden the suite of portfolio building blocks that enables investors to improve ESG scores meaningfully while still optimizing their ability to closely track market-cap weighted indexes. A third product combines exposure to megatrends or transformative forces shaping the global economy with ESG criteria.
The three new products are:
• iShares MSCI EMU SRI UCITS ETF (SMUA): provides targeted exposure to companies within the European Monetary Union stock market with the highest ESG scores. It tracks the MSCI EMU SRI Select Reduced Fossil Fuel index and carries a TER of 0.20 per cent. The fund is the ESG alternative to the iShares Core MSCI EMU UCITS ETF (CEU)
• iShares $ Corp Bond ESG UCITS ETF (SUOU): an ESG alternative to the flagship iShares $ Corp Bond UCITS ETF (LQDE), which currently holds over USD6.8 billion in assets, this fund offers exposure to investment grade USD-denominated corporate bonds with high MSCI ESG ratings. It tracks the Bloomberg Barclays MSCI US Corporate Sustainable SRI index and carries a TER of 0.15 per cent
• iShares Smart City Infrastructure UCITS ETF (CITY): A thematic fund aiming to capitalise on the opportunities presented by the new generation of smart megacities offering sustainable ways of living, in the wake of the global migration from the countryside to cities. The STOXX Global Smart City Infrastructure index also incorporates ESG screening criteria for certain sectors, risks and controversies. The fund carries a TER of 0.40 per cent.
Stephen Cohen, Head of iShares EMEA at BlackRock, says: “Just as investors have embraced index investing for efficient, transparent and scalable market exposures in traditional portfolios, ETFs are enabling investors to actively pursue sustainability objectives and take control of their investment outcomes. Providing ESG equivalents to our flagship products while providing innovative thematic products will further steepen the ETF adoption curve, as investors seek out the most efficient market exposure tools with which to navigate markets.”
Carolyn Weinberg, Global Head of iShares Product at BlackRock, says: “The transparency of sustainable indexing methodologies empowers portfolio builders to articulate their ESG goals, as the demand for sustainable portfolios grows. Investors are taking different routes to embed ESG criteria within their portfolios using ETFs. As we extend our global range we are placing a strong emphasis on helping clients make deliberate investment choices to achieve their objectives.”
