CSOP and CGS-CIMB Securities have launched the CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index exchange-traded fund (ETF) on the Singapore Exchange (SGX) on Sept 28.
This is the first SGX-listed ETF to track the newly created FTSE Asia Pacific Low Carbon Select Index, which comprises companies with the lowest carbon intensities relative to peers in their industries.
The new ETF is said to be the largest equity ETF by assets under management (AUM) on listing in Singapore with an AUM of $150 million according to Bloomberg data.
According to CGS-CIMB, FTSE’s inclusion criteria for its low carbon index differs from other green indexes in that it takes into consideration measures adopted by companies that will likely lead to further reductions in carbon intensity. The inclusion criteria uses data from organisations such as the Transition Pathways Initiative.
As of Sept 19, there are 214 companies represented by the index.
The FTSE Asia Pacific Low Carbon Select Index has risen by around 48% based on back-tested performance to 2015, outperforming other Asian green indexes such as the MSCI Asia Pacific Climate Change Index and the MSCI Asia ex Japan Low Carbon SRI Leaders index.
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“Climate change, including global warming, is real and has given rise to many existential threats. CGS-CIMB stands committed to doing its part to reduce carbon emissions and protect the environment by making sustainability a key part of our strategy and investment approach. Launching the CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF will help like-minded investors tap the region’s growth while addressing their concerns about global warming,” says Carol Fong, group CEO of CGS-CIMB Securities.
She adds that focusing on environmental, social and governance (ESG) funds does not result in lower returns for investors. “On the contrary, ESG strategies have matched or even surpassed broader portfolios that include companies with weaker ESG scores. Companies with lower carbon footprints will likely generate higher returns in the longer term as governments around the world step up efforts to combat global warming.”
Michael Syn, senior managing director and head of equities, SGX Group, says, “As the world faces up to the transition challenge, it has emerged as a top priority for investors to evaluate their investments through a climate lens to better manage related risks in their portfolios and at the same time, seek out related opportunities.”
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“This product caters to the increasing demand from investors who wish to incorporate climate consideration into their Asia Pacific portfolios. We will continue our work with CSOP Asset Management and CGS-CIMB to enhance our ETF product shelf to meet the evolving needs of investors globally,” he adds.
The CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF’s main listing will be in Singapore with possible secondary listings on other Asian stock markets in future.
As at 10am, the CSOP CGS-CIMB FTSE Asia Pacific Low Carbon Index ETF is trading at $1.425.
