iShares MSCI EM ESG Enhanced UCITS ETF (Acc)
| Issuer: iShares |
| Asset Class: Equity |
| TER: 18bps |
| Trading Currency: GBP |
| Pays Income: False |
| Listing Date: 22 Nov 2019 |
| Ticker: EDG2 |
| ISIN: IE00BHZPJ239 |
This fund offers exposure to a broad basket of companies across emerging markets, but with a crucial modern twist. It is designed for investors who want to align their portfolios with strong environmental, social, and governance (ESG) principles. The strategy involves selecting companies that demonstrate superior ESG ratings compared to their industry peers. This approach aims to capture the growth potential inherent in developing economies while simultaneously mitigating risks associated with poor corporate practices, environmental negligence, and social controversies. By focusing on ESG leaders, the portfolio is constructed to be more resilient and potentially better positioned for long-term, sustainable growth.
A key feature of this investment is its specific focus on climate transition. It is classified as a Climate Transition Benchmark (CTB), meaning it follows a clear and ambitious decarbonisation trajectory. The underlying index significantly reduces exposure to carbon emissions compared to the broader market and excludes companies involved in controversial activities like thermal coal and oil sands. This forward-looking methodology not only helps in managing climate-related risks but also positions the portfolio to benefit from the global shift towards a low-carbon economy. It provides a way to invest in the future of emerging markets, which are increasingly pivotal in the global energy transition.
In essence, this instrument provides a core holding for an emerging markets allocation that is both performance-oriented and values-driven. It offers a diversified, physically-replicated exposure that avoids the complexities and potential counterparty risks of derivatives. For investors seeking to harness the dynamism of emerging economies without compromising on their sustainability and climate goals, this offers a compelling, single-product solution that systematically tilts towards companies better prepared for the challenges and opportunities of the 21st century.
