UBS Asset Management has launched a commodity transition ETF integrating ESG risks into the methodology.
The UBS ETF CMCI Commodity Transition SF UCITS ETF (RENEW) is listed on the Six Swiss Exchange, Deutsche Boerse and the London Stock Exchange with a total expense ratio (TER) of 0.34%.
It tracks the UBS CMCI Sustainability Transition index which re-weights the underlying commodities based on their respective ESG risks and opportunities.
UBS built the index methodology with sustainable investment research firm rfu, evaluating current and future relevant ESG factors of more than 30 commodities across energy, agriculture and metals.
Each commodity is weighted according to its social, ecological, production and utilisation risks as well as a commodity’s country production mix via rfu’s sovereign rating model.
The index uses the UBS CMCI commodity futures rolling concept, which helps to mitigate negative roll yield and maximising tracking to underlying spot commodity prices.
The index aims to improve its ecological and social score year-on-year by leveraging CMCI’s tenor diversification, taking positions across the liquid part of the futures curve in a bid to enhance its transition characteristics.
Specifically, the CMCI weights future tenors across the curve by the 75% liquidity and 25% equal weighting rule, hoping to increase allocation at the backend of the curve and enhance liquidity for producers.
RENEW is classified as Article 6 under the Sustainable Finance Disclosure Regulation (SFDR).
It is the latest sustainability focused-ETF launched by UBS AM after it unveiled the UBS ETF S&P USA Dividend Aristocrats ESG Elite UCITS ETF (CHSB) earlier this month.
Is comes as recent research by the Index Industry Association (IIA) found asset managers were upping their ESG exposure in commodities.