Industry Updates

UBS AM tightens sustainable metrics on dividend ESG ETF

The ETF will start tracking the S&P Developed ESG Elite Dividend Aristocrats index

Theo Andrew


UBS Asset Management has tightened the sustainability metrics on its developed dividend aristocrats ESG ETF to exclude more polluting companies.

The UBS ETF S&P Dividend Aristocrats ESG UCITS ETF (UBUM) will switch from tracking the S&P Developed ESG Dividend Aristocrats index to the S&P Developed ESG Elite Dividend Aristocrats index.

As a result, the ETF will change its name to the UBS ETF S&P Dividend Aristocrats ESG Elite UCITS ETF, under the same ticker and total expense ratio (TER) of 0.30%.

It is the second time UBUM has adjusted its sustainability metrics after it added an ESG filter in February last year.

The new index will increase the number of sector exclusions it applies to include shale energy, arctic oil and exploration, oil and gas, adult entertainment, alcoholic beverages, gambling, genetically modified plants and seeds, nuclear power, predatory lending and palm oil.

Backtested, the new ESG ‘elite’ index has outperformed the previous index, returning 3.1% over the past three years versus -1.5% for the S&P Developed ESG Dividend Aristocrats index.

The sector allocation of the two indices is also similar with both dominated by financials which account for 25.2% of the new index and 24.2% of the previous index.

The biggest difference is communication services which has risen from 13.4% to 19.9% while real estate declined from 16.2% to 13.7%.

UBS AM said the changes will come into force on 17 August.

The ETF issuer continues to green up its portfolio through both new launches and index switching.

In May, it launched the UBS ETF Bloomberg MSCI US Liquid Corporates 1-5 Year Sustainable UCITS ETF (CBS5) while last November, it switched the index on its China ESG ETF to one that focuses on companies with low exposure to carbon emissions.

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