First Trust has launched an actively-managed global ESG ETF that incorporates the quality and low volatility factors.
The First Trust Global Capital Strength ESG Leaders UCITS ETF (FCSG) is listed on the London Stock Exchange and Euronext Amsterdam with a total expense ratio (TER) of 0.75%.
This is the first ESG ETF the firm has launched in Europe.
FCSG’s starting point is the MSCI ACWI ESG Leaders index which offers exposure to large and mid-cap companies across 23 developed and 27 emerging countries while excluding companies involved in alcohol, tobacco, gambling, nuclear power, conventional weapons, and civilian firearms.
First Trust’s capital strength methodology subsequently excludes any company that does not have a minimum three-year average trading volume of $5m, a minimum of $1bn in cash and short-term investments, long-term debt to market cap ratio of less than 30% and a return on equity of greater than 15%.
Taking into consideration short and long term volatility as well as country and sector concentration, FCSG ends up with a portfolio of 50 stocks.
Rebalanced semi-annually, the 50 stocks are equally weighted and any stock that falls below MSCI’s ESG rating below BB can be removed between rebalance dates.
Rupert Haddon (pictured), managing director and head of sales at First Trust Global Portfolios, commented: “We are seeing an increasing appetite from investment managers and their clients for investment solutions that marry robust financial performance through a socially responsible lens.
“We are thrilled to be launching FCSG which blends two philosophies into one solution balancing high quality names with responsible investing wrapped into a rules-based actively-managed ETF.”
Last month, First Trust expanded its thematic ETF range by rebranding three smart beta ETFs highlighting growing demand for the segment.