Wed, 13/06/2018 - 13:26
Ossiam, the Paris-based smart beta investment manager and affiliate of Natixis Investment Managers, has launched a low carbon and environmental, social, governance (ESG) version of its existing Ossiam Shiller Barclays CAPE US Sector Value ETF.
The ETF is listed today on the London Stock Exchange and was listed earlier this month on the Xetra exchange of Deutsche Börse.
The Ossiam ESG Low Carbon Shiller Barclays CAPE US Sector UCITS ETF aims to deliver a risk/return profile similar to the existing Shiller Barclays CAPE US Sector Value index, but with a significantly reduced carbon footprint and improved ESG profile.
Ossiam developed the enhanced strategy in response to feedback from existing investors, who are looking to improve their climate impact and ESG-related exposure. The original Ossiam Shiller Barclays CAPE US Sector Value strategy currently has EUR1.31 billion (USD1.53 billion; GBP1.15 billion) in assets under management as of the end of May.
The new ETF, which uses physical replication, has a total expense ratio (TER) of 0.85 per cent and is the first Ossiam ETF to use the ICAV (Irish Collective Asset Management Vehicle) structure.
Bruno Poulin, Ossiam’s CEO, says: “We expanded on our existing ETF with ESG and low carbon criteria since they can play a significant part in creating long-term equity value and enhance the contribution of the Shiller CAPE ratio. We see the revised strategy as likely to deliver sustainable positive returns while meeting greater demand for investment funds satisfying ethical standards.”
Professor Robert J. Shiller, says: “ESG investing no longer has to be a sacrifice for morality. With this new fund it can serve as both a key component of a portfolio as well as investing in companies that do good for society.”
Nicolas Aractingi, Director in the Quantitative Investment Strategies Origination team at Barclays, says: “We are delighted to continue building on our successful partnership with Ossiam and renowned author and Yale economist Robert Shiller. This launch highlights Barclays’ commitment to offering ethical investment solutions as our clients look to invest more responsibly and hold an environmentally friendly and sustainable portfolio.”
The enhanced strategy starts by removing companies in specific businesses, such as controversial weapons, tobacco and coal, companies that undergo severe controversies, and companies in breach of the UN Global Compact Ten Principles. The strategy incorporates publicly-available exclusion lists offered by large, highly-regarded Scandinavian institutional investors. All of the filters improve the strategy’s ESG profile.
With the remaining stocks, the strategy selects the portfolio that mimics the financial behaviour of the Barclays Shiller CAPE US Sector Value Net TR Index and minimises the expected tracking error. It then reduces its carbon footprint, while keeping the same sector exposure of the original index. The carbon footprint reduction is three-fold: 40 per cent reduction in the total greenhouse gas emissions (GHG), 40 per cent reduction in the total potential GHG emissions from reserves (i.e. GHG emission linked to fossil proven reserves that are not yet burned but will be in the future, when extracted from the ground) and 40 per cent reduction in the carbon intensity of the strategy compared to the original index.
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