Exchange-traded fund provider Invesco Canada has launched the Invesco S&P 500 ESG Index ETF (ESG) the first Canadian-listed ETF offering exposure to companies that meet S&P DJI’s Environmental, Social and Governance criteria for selection in the S&P 500® ESG Index. This unique methodology positions the Invesco S&P 500 ESG Index ETF as a way for Canadian investors to access US large-cap companies that better aligns with their personal ESG values, while still offering a risk/return profile similar to the benchmark S&P 500® Index.
“Invesco has been very deliberate in our expansion of the ETF business in Canada, thoughtfully launching products that we feel will further open up innovation in the space,” says Dan Draper, Managing Director, Global Head of Invesco ETFs. “We believe that the Invesco S&P 500 ESG Index ETF will build on that history by offering an ESG fund that utilises the framework of the most notable measure of the US equity market.”
Invesco’s first ESG ETF in Canada offers investors the following potential benefits:
• Constituents picked from the notable S&P 500 index – The S&P 500 Index is the most recognized gauge of large-cap US equities. The S&P 500 ESG Index was designed for investors who wish to integrate ESG components into broad-based investments without straying far from the overall profile of the S&P 500 Index.
• Competitive pricing – The Invesco S&P 500 ESG Index ETF will have a management fee of 15 basis points, making the ETF one of the most economical ESG ETFs currently available in Canada.
• Core exposure – The S&P 500 ESG Index is broadly constructed to be part of an investor’s core portfolio, rather than having a narrow or thematic focus.
• Straightforward methodology – A transparent and quantifiable measure to gauge ESG practice, the methodology used for the S&P 500 ESG Index is applied across all companies included in the S&P 500 Index.
• Robust measure of ESG – Each company’s S&P DJI ESG score is calculated by SAM, a division of S&P Global, using data gathered from SAM’s Corporate Sustainability Assessment (CSA) and publicly available disclosures.
“The launch of the Invesco S&P 500 ESG Index ETF recognises the demand from Canadian investors for an ETF that screens for ESG but still offers a return profile in line with the US large-cap market,” says Jasmit Bhandal, Vice President, Head of ETF Product Strategy & Development in Canada. “We believe that S&P DJI’s method of evaluating and eliminating companies in this ESG Index could produce an ETF portfolio that overall favours companies with strong ESG scores, while still maintaining the same sector-balances and risk/return profile of its parent.”
The Invesco S&P 500 ESG Index ETF is available in CAD (ticker symbol: ESG) and CAD-hedged (ticker symbol: ESG.F) series, allowing investors to choose the currency exposure that best suits their unique investment goals. Units in the ETF begin trading on the Toronto Stock Exchange (TSX) today.
Invesco ‘Broad-based plus’ US Equity Market ETFs
Canadian investors typically have 6.9% of their portfolio invested in US equities. Invesco Canada now has three ETFs that offer investors a way to remain invested in the broad-based US equity market with an additional screen. Using the constituents of the S&P 500 Index, all three ETFs screen additional economic or non-financial aspects that could potentially affect financial performance, namely volatility, overvaluation in the US equity market, and an interest in sustainability. These three ‘broad-based plus’ Canadian ETFs are:
• Invesco S&P 500 Low Volatility Index ETF (ULV)
• Invesco S&P 500 Equal Weight Index ETF (EQL)
• Invesco S&P 500 ESG Index ETF (ESG)
“With the launch of the Invesco S&P 500 ESG Index ETF, Invesco now has a comprehensive suite of ‘broad-based plus’ solutions for Canadian investors looking to gain exposure to the US equity market in a way that best suits their personal investing needs,” says Draper.
The S&P 500 ESG Index methodology targets 75 per cent of the traditional S&P 500’s float market capitalization at the Global Industry Classification Standard (GICS®) level. S&P 500 Index companies are screened to exclude those involved in tobacco production, or with a meaningful amount of revenue from tobacco; companies involved with controversial weapons; and those companies with a low UN Global Compact score. The remaining companies are sorted according to their S&P DJI ESG Score, which is based on the SAM CSA. Next, companies are selected for inclusion, top down by score, targeting 75 per cent of the market capitalisation of each GICS industry group. The S&P 500 ESG Index is rebalanced annually.
“We’re excited to partner with Invesco on the launch of the first ETF product in Canada based on the S&P 500 ESG Index,” says Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices. “Since we introduced the world’s first global ESG Index 20 years ago, the Dow Jones Sustainability World Index, S&P Dow Jones Indices has been a pioneer providing benchmarks for investors seeking to align their investment goals with their individual values.”
The launch of the Invesco S&P 500 ESG Index ETF also marks a new option in Invesco Ltd.’s growing commitment to ESG offerings globally. In the US, Invesco has been offering seven sustainability focused ETFs since 2005. These ETFs offer exposure to clean energy and clean technology with performance track records of over ten years. In EMEA, Invesco has three ESG ETFs that screen companies across three different global regions.
In recent years Invesco has strengthened its focus on the ESG space, not only in the growing suite of passive ESG products, but through a commitment to incorporating important sustainability and governance issues in its active strategies.
Invesco’s Global ETF suite has 439 ETFs with USD272.8 billion assets under management (AUM) globally as of December 2019.