Invesco has launched Europe’s first Nasdaq 100 ETF that incorporates environmental, social and governance (ESG) metrics.

The Invesco Nasdaq-100 ESG UCITS ETF (NESG) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.25%.

NESG tracks the Nasdaq-100 ESG index which offers exposure to the largest non-financial companies on the Nasdaq exchange that score well from an ESG perspective.

Through a Sustainalytics ESG model, companies in the index are weighted based on how effectively they manage ESG risk.

The index also excludes companies involved in adult entertainment, alcohol, arctic oil and gas exploration, recreational cannabis, controversial weapons, gambling, military weapons, nuclear power, oil and gas, oil sands, riot control, shale energy, small arms, thermal coal, tobacco and ones that do not comply with the UN Global Compact or have a high controversy score.

Only six stocks were removed from the parent index but the weighting methodology has lowered the ESG risk rating by 10%, according to data from Nasdaq.

The index is rebalanced quarterly.

Gary Buxton (pictured), head of EMEA ETFs and indexed strategies at Invesco, said: “As investors continue searching for ways to align their portfolios more closely with their personal values, we believe they should also consider the financial impacts of ESG, in terms of managing risks and uncovering opportunities.”

Lauren Dillard, head of investment intelligence at Nasdaq, added: “The interest in integrating ESG considerations into investment portfolios is on the rise globally. We are pleased to work with Invesco to introduce a refined and ESG-friendly version of one of the world's most preeminent benchmarks.”

NESG is the third Nasdaq-related ETF Invesco has launched this year. In March, the US giant unveiled a Nasdaq ‘next generation’ ETF, the Invesco NASDAQ Next Generation 100 UCITS ETF (EQJS), and a swap-based version of its flagship Nasdaq 100 ETF, the Invesco Nasdaq-100 Swap UCITS ETF (EQQS).

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