Industry Updates

Lyxor takes fee war to climate change ETFs

PABU is now the cheapest climate ETF available in Europe

Tom Eckett


Lyxor has slashed the fees on two climate change ETFs that track the European Union’s Paris-Aligned Benchmark (PAB).

The $202m Lyxor Net Zero 2050 S&P 500 Climate PAB UCITS ETF (PABU) has seen its total expense ratio (TER) reduced from 0.20% to 0.07% while the Lyxor Net Zero 2050 S&P Europe Climate PAB UCITS ETF (RPAB) has been cut by 2 basis points to 0.18%.

PABU is now the cheapest ETF linked to the EU’s climate benchmarks that were launched in November 2019 as part of a move to introduce new standards on climate change.

The previous ETF with that title was the Franklin S&P 500 Paris Aligned Climate UCITS ETF (500P) which has a TER of 0.15%.

The fee cuts from Lyxor highlight the increasingly competitive nature of the climate change ETF landscape.

The French asset manager was the first to launch climate ETFs tracking the goals of the Paris Agreement in March 2020.

However, a whole host of ETF issuers have followed suit in Europe including Amundi, Deka, Franklin Templeton, BlackRock, Tabula, JP Morgan Asset Management and UBS Asset Management.

Climate change ETFs: A year of dramatic development

The PAB benchmark, which PABU and RPAB track, is designed to align with a 1.5°C scenario that targets a carbon intensity reduction of 50% versus the parent universe and a minimum 7% decarbonisation yearly reduction.

Climate ETFs linked to the EU’s benchmarks currently are categorised as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR).

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