BlackRock rolls out four new ESG-focused sector ETFs in Europe

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BlackRock has broadened its suite of socially responsible global sector ETFs in Europe with the addition of four new funds.

BlackRock rolls out four new ESG-focused sector ETFs
BlackRock now offers seven ESG-focused global sector ETFs in Europe.

Listed in US dollars on Euronext Amsterdam and SIX Swiss Exchange, the new ETFs target stocks from the materials, communication services, industrials, and energy sectors while incorporating various environmental, social, and governance (ESG) criteria.

They are the iShares MSCI World Materials Sector ESG UCITS ETF (WMTS)iShares MSCI World Communication Services Sector ESG UCITS ETF (WCMS)iShares MSCI World Industrials Sector ESG UCITS ETF (WINS), and iShares MSCI World Energy Sector ESG UCITS ETF (WENE).

The funds are linked to ‘ESG Reduced Carbon Select’ sector-specific indices from MSCI which are derived from the parent MSCI World Index, a reference for large and mid-cap companies from 23 developed market countries.

Stocks are first assigned to specific sectors according to the Global Industry Classification Standard (GICS).

The ESG methodology then removes violators of UN Global Compact principles, companies embroiled in severe ESG-related controversies, and firms with significant exposure to weapons, tobacco, thermal coal, and oil sands.

The remaining constituents are weighted using an optimization technique that seeks to increase each index’s weighted average ESG score by 20%, reduce their carbon intensity and fossil fuel reserves by 30%, and minimize tracking error relative to their parent universes. Reconstitution occurs semi-annually while the indices are rebalanced on a quarterly basis.

The new listings extend BlackRock’s suite of ESG-focused global sector ETFs to seven products with the existing three funds utilizing the same ESG investment approach while targeting stocks from the information technology, financials, and health care sectors. The only fund with significant assets is the iShares MSCI World Information Technology Sector ESG UCITS ETF (WITS) which houses $200 million.

Each ETF in the suite comes with an expense ratio of 0.25% and is classified as an Article 8 product under the EU’s Sustainable Finance Disclosure Regulation (SFDR).


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