UBS S&P 500 CLIM. TRAN ESG ETF USD ACC

Issuer: UBS

Asset Class: Equity

TER: 7bps

Trading Currency: GBX

Pays Income: False

Listing Date: 28 Mar 2024

Ticker: CT5

ISIN: IE000S4A5WE2

This financial instrument is engineered to provide investors with exposure to the US large-cap equity market while integrating crucial climate and environmental, social, and governance (ESG) considerations. It achieves this by tracking the performance of the S&P 500 Climate Transition ESG Index. The underlying index is designed to select and weight companies from the parent S&P 500 universe that are best positioned to benefit from the transition to a low-carbon economy. The goal is to create a portfolio that is compatible with the 1.5°C global warming scenario outlined in the Paris Agreement, offering a forward-looking approach to sustainable investing within a core equity allocation.

The methodology of the benchmark index is comprehensive, starting with the application of specific ESG-related exclusions. Companies involved in controversial weapons, tobacco, or those failing to comply with the principles of the United Nations Global Compact are removed. Subsequently, the remaining constituents are re-weighted based on their climate performance. The index increases exposure to companies demonstrating strong green credentials and clear decarbonization targets, while reducing the weight of those with higher carbon intensity and fossil fuel reserves. This sophisticated approach aims to achieve a significant reduction in carbon emissions compared to the traditional S&P 500, without materially deviating from the parent index's sector composition.

For investors, this product represents a compelling solution for aligning their portfolio with climate objectives and broader ESG values. It allows for participation in the growth potential of leading US corporations while actively managing risks associated with climate change and poor corporate governance. As an accumulating share class, all dividends paid by the underlying companies are automatically reinvested back into the fund, which can enhance long-term returns through the power of compounding. It serves as an efficient, low-cost core holding for those seeking to build a resilient and responsible investment portfolio.