New Listing

BlackRock adds China tech and two ESG ETFs to range

Takes the firm's ESG enhanced ETF range to eight

Tom Eckett

BlackRock iShares office sign

BlackRock has expanded its ETF range with the launch of a China tech and two ESG enhanced products, ETF Stream can reveal.

The iShares MSCI Pacific ex-Japan ESG Enhanced UCITS ETF (PCEL), the iShares MSCI World Small Cap ESG Enhanced UCITS ETF (EWSA) and the iShares MSCI China Tech UCITS ETF (CTEC) are listed on Euronext Amsterdam with total expense ratios (TERs) of 0.20%, 0.35% and 0.45%, respectively.

PCEL and EWSA will sit in the firm’s $9bn ESG enhanced ETF range which started incorporating the European Union’s Climate Transition Benchmark (CTB) at the end of November.

They will track respective MSCI ESG Enhanced Focus CTB indices which employ a number of exclusions including weapons, civilian firearms, tobacco, thermal coal, unconventional oil and gas and very severe controversies.

They are classified as Article 9 under the EU’s Sustainable Financial Disclosure Regulation (SFDR).

The other six ETFs in the range are:

Meanwhile, CTEC tracks the MSCI China Technology Sub-Industries ESG Screened Select Capped index which offers exposure to cross-sector tech exposures including digitalisation, automation and the Internet of Things (IoT).

It also employs an ESG screen by excluding companies that are not compliant with UN Global Compact principles, have an MSCI ESG controversy score of 0 or are involved in weapons, tobacco and thermal coal.

The five largest companies in the index are capped at 7.5% while all other companies are capped at 4.5%.

It is classified as Article 8 under SFDR.

“There are tailwinds for tech subsectors and themes that align with China’s long-term sustainability-driven growth initiatives,” BlackRock said. “For example, data and cybersecurity firms are set to benefit from strong demand led by government and the public sector.

“Tech hardware, software and semiconductor firms are also well-positioned for long-term growth initiatives and innovations off the back of China’s pledge to reach net-zero by 2060, with semiconductors, in particular, seeing strong capex in 2021 which is expected to continue.”

There are a number of ETFs in Europe that offer exposure to China tech. The largest is the $903m KraneShares CSI China Internet UCITS ETF (KWEB) which launched in November 2018 while the Invesco MSCI China Technology All Shares Stock Connect UCITS ETF (MCHT), the UBS ETF Solactive China Technology UCITS ETF (CQQQ) and the HSBC Hang Seng Tech UCITS ETF (HSTE) were all launched in the last 12 months.

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