BlackRock has launched a global quality factor ESG ETF offering a defensive tilt on sustainable investing, ETF Stream can reveal.
The iShares MSCI World Quality Factor ESG UCITS ETF (IWQE) is listed on Euronext Amsterdam with a total expense ratio (TER) of 0.30%.
IWQE tracks the MSCI World Quality ESG Reduced Carbon Target Select index of 142 high quality companies from 23 developed markets based on high return on equity, stable earnings growth and low financial leverage.
The index takes its parent benchmark and excludes companies controversial and nuclear weapons, civilian firearms, tobacco, thermal coal, UN Global Compact violators and those involved in “very severe” business controversies.
It then tilts remaining constituents to achieve a 30% carbon reduction and a 20% ESG score increase while keeping sector and country exposures and tracking error within 5% of the MSCI World Quality index.
A BlackRock spokesperson told ETF Stream: “We continue to expand our range of products which combine factors with sustainable investing and further increase the options available to investors for creating sustainable portfolios.
“In the current environment, pivoting to companies that score highly on quality metrics help add a layer of resilience and defence in equity allocations.
“Historically, quality has shown resilience in periods of slowing growth, and quality stocks have defended their profit margins throughout recent periods of higher inflation. Low leverage and an underweight to banks make a strong case for quality in the current environment.”
The new launch comes within a fortnight of MSCI halving the time it takes to evict UN Global Compact violators from indices tracked by 41 BlackRock ETFs with $70.5bn assets under management (AUM).
Last December, the firm listed the iShares MSCI ACWI SRI UCITS ETF (SAWI) on Euronext and Deutsche Boerse.