Invesco MSCI Japan ESG Climate Paris Aligned UCITS ETF Acc
| Issuer: Invesco |
| Asset Class: Equity |
| TER: 19bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 09 Dec 2021 |
| Ticker: PAJP |
| ISIN: IE000I8IKC59 |
This fund offers targeted exposure to the Japanese equity market with a strong emphasis on environmental, social, and governance (ESG) principles, specifically aligning with the objectives of the Paris Agreement. The investment strategy is designed to track a Paris-Aligned Benchmark (PAB), which means the portfolio is constructed to support the transition to a low-carbon economy. It aims for a substantial reduction in greenhouse gas intensity compared to the broad market and follows a clear decarbonization trajectory year-on-year. This approach allows investors to gain access to Japanese large and mid-cap companies that are not only leaders in ESG practices but are also considered to be on a path consistent with limiting global warming to 1.5°C.
The underlying index employs a rigorous screening methodology. It begins by excluding companies involved in controversial business activities, such as controversial weapons, tobacco, and fossil fuels, as well as those violating international norms like the UN Global Compact. From the remaining universe, the index uses an optimization process to increase exposure to companies with strong ESG ratings and those with lower carbon emissions or green revenues, while simultaneously reducing exposure to companies with higher climate-related risks. This results in a portfolio that is tilted towards more sustainable businesses and innovators in the green economy within Japan.
For investors seeking to de-risk their portfolio from climate-related transition risks and align their capital with positive environmental outcomes, this fund presents a compelling option. It provides a core holding for Japanese equity exposure while integrating forward-looking climate metrics. By investing in companies that are better prepared for a low-carbon future, the fund may offer enhanced long-term risk-adjusted returns. The accumulating share class structure is beneficial for long-term investors, as all dividend income is automatically reinvested back into the fund to compound growth over time.
