State Street Global Advisors (SSGA), the exchange-traded fund issuer behind the SPDR range of products, recently unveiled the world’s first low-carbon ETF in order to give investors exposure in a fund that cares for the environment.
The newly-launched State Street MSCI ACWI Low Carbon Target ETF (LOWC) focuses on companies that are carbon-efficient and emit less-amount of green-house gases compared to their peers.
Nevertheless, the low carbon emphasis should not lead you to think that LOWC employs some obscure investment theme or holds a raft of no-name stocks. Rather, the portfolio contains a slew of familiar, large cap companies from different sectors, including energy.
The passively-managed new fund tracks the MSCI ACWI Low Carbon Target Index and focuses on stocks from both developed and emerging markets that emit lower carbon into the atmosphere; i.e. “low carbon emissions relative to sales and per dollar of market capitalization.”
The underlying index caps country as well as sector exposure apart from screening carbon emissions. Overall, the fund holds more than 1,300 stocks, indicating the fund has minimal concentration risks.
The portfolio is heavy on financials (23.14 percent) and has double digit exposures in Information Technology (13.83 percent), Health Care (12.26 percent), Industrials (12.10 percent), Consumer Discretionary (11.42 percent) and Consumer Staples (10.10 percent). The top five holdings include US stalwarts such as Apple, Microsoft, Johnson & Johnson, Wells Fargo and General Electric.
Geographically, US-based companies get the maximum allocation, making up for 52.37 percent of total assets. UK, Japan, Canada and Germany take the next four spots with exposures of 7.03 percent, 6.70 percent, 3.78 percent and 3.15 percent, respectively.
LOWC has a price/earnings multiple of 15.84 and a weighted average market capitalization of about $88 billion.
The fund has a gross annual expense ratio of 0.30 percent.
Disclosure: No holdings
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