Invesco have launched a new Japan and Asia Pacific focussed ETFs to add to their existing suite of ESG ETFs. The ETF will track a customised versions of MSCI ESG indices in the same way Invesco’s existing ESG Equity ETFs track indices in Europe and the US.
Invesco builds their ESG ETFs by taking MSCI Indices and removing companies involved in controversial, conventional or nuclear weapons, civilian firearms, oil sands, thermal coal, tobacco or recreational cannabis. Companies that have had consistently poor ESG ratings are also removed in a careful balancing act between improving the ESG credentials of the ETF portfolios whilst tracking the originals MSCI Index as closely as possible.
“Different investors will often vary in their objectives, and this is most evident in the ESG space. Generally speaking, the more you exclude from an index, the more likely the performance will deviate from the base index. While that is acceptable for some investors, it’s not for others,” said Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco.
“Many want to reduce their portfolio’s carbon footprint and improve other ESG characteristics but at the same time maintain their overall risk and expected returns. We designed these ETFs to provide investors with materially significant ESG improvements for their core equity exposure.”
“With 60% of all equity ETF flows last year going into funds with an ESG objective, demand is clearly strong. We believe ESG will be embedded even more broadly into portfolios with investors no longer needing to sacrifice their investment objectives to follow their principles'” said Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco.
“Our suite of MSCI ESG Universal ETFs offers investors low-cost tools to construct diversified equity portfolios. We will continue building out our ESG offering in response to market opportunities and driven by investor demand.”