The green economy is growing rapidly and sustainable finance offers more and more opportunities: among the best investments are the ESG ETFs, which invest in projects that respect ethical and environmental criteria.
I won’t give you all the talk about sustainable investments and because the green economy is a sector to focus heavily on in the coming years, for a detailed introduction I refer you to the article ESG investments for a sustainable future. Then as I describe 3 Lyxor ETFs that invest according to Esg criteria I also recommend the guide Green bonds ETFs: why put them in your portfolio. Let’s go straight to the point and see the characteristics of the Lyxor Green Bond Etf, the Lyxor Msci Europe Esg Leaders (DR) Ucits Etf and the Lyxor Msci Emu Select Esg Trend Leader (DR) Ucits Etf.
The ETF to invest in green bonds
The Lyxor Green Bond Etf allows you to invest in the green bond investment grade market (bonds issued to finance environmental projects), is a physical replica and follows the performance of the Solactive Green Bond Eur Usd Ig Index, which includes 267 stocks. Of these, 20.5% have triple A ratings, 26.5% double A, 30% single A and 23% triple B. These are bonds with at least 12 months of life and a minimum exposure of 300 million dollars or euros.
Basket titles are selected with great rigor and must meet transparency and reporting requirements to ensure that proceeds are used only for low carbon and climate friendly projects. The Lyxor Green Bond Etf, which has been awarded the “Greenfin” certificate (the certification for private investments in green economy, introduced by the French government at the end of 2015), has a total annual cost of 0.25 %.
Two ESG ETFs with SRI label
These two ETF Lyxors received the SRI label from the French Ministry of Finance, a “green quality label” which is attributed to funds that take sustainable investment criteria into consideration, after a rigorous analysis process conducted by accredited and independent organizations .
“This label – commented François Millet, Head of Etf Strategy, ESG & Innovation of Lyxor – recognizes Lyxor’s expertise in conceiving innovative and quality ETFs and encourages the transition towards a more sustainable economy”.
Where the two ESG ETFs invest
The two Lyxor ETFs replicate MSCI indices designed to select the best-in-class companies with robust Esg (Environmental Social Governance) profiles:
- Lyxor Msci Europe Esg Leaders (DR) Ucits Etf allows you to take a position on listed companies in Europe that are considered fully leaders in compliance with Esg criteria
- Lyxor Msci Emu Select Esg Trend Leader (DR) Ucits Etf replicates the MSCI EMU Select Esg Rating and Trend Leaders Net Return EUR index, designed to measure the performance of companies that have a solid Esg profile and a trend towards improving this profile
The Esg rating defined by MSCI assigns each company a score based on the exposure to environmental, social and governance risks specific to the sector, and the ability to manage these risks compared to competitors.
The ETFs are physically replicated and have a total annual cost of 0.20%.