UBS (IE) ETF plc - S&P 500 Climate Transition ESG UCITS ETF (hedged to GBP) A-dis

Issuer: UBS

Asset Class: Equity

TER: 9bps

Trading Currency: GBX

Pays Income: False

Listing Date: 28 Mar 2024

Ticker: CT5G

ISIN: IE00049BN7O1

This investment product provides exposure to the large-cap US equity market by tracking a specialized version of the S&P 500 index. It is specifically designed for investors who wish to align their portfolios with the transition to a low-carbon economy while adhering to broader Environmental, Social, and Governance (ESG) principles. The strategy goes beyond simple exclusion by re-weighting constituents based on their climate transition credentials. It aims to overweight companies that are better positioned to benefit from the climate transition, such as those with robust carbon reduction targets and strong green business revenues, while underweighting those with higher climate-related risks.

The underlying benchmark is structured as an EU Climate Transition Benchmark (CTB), which imposes stringent requirements. This includes achieving an initial 30% reduction in carbon intensity compared to the parent index and maintaining a 7% year-on-year decarbonization trajectory. The methodology also incorporates specific business activity exclusions, screening out companies involved in thermal coal, controversial weapons, and tobacco, as well as those that violate the principles of the UN Global Compact. The result is a portfolio that retains the core characteristics of the US large-cap market but with a significantly improved sustainability profile, making it a suitable core holding for climate-conscious investors. This particular share class also incorporates a currency hedging strategy to mitigate the impact of exchange rate fluctuations for investors whose home currency is not the fund's base currency.