UBS Asset Management launches first UCITS ETF to apply strict sustainability criteria to S&P 500 equity universe

UBS Asset Management (UBS AM) has launched the world’s first ETF to apply strict ESG criteria to the S&P 500 equity universe. The UBS ETF S&P 500 ESG Elite UCITS ETF is intended for investors who require US large cap exposure with a strong sustainability profile. 

The ETF tracks the S&P 500 ESG Elite Index, which is a portfolio of companies with best-in-class ESG scores representing around 25 per cent of the market capitalisation of the S&P 500 universe. The index methodology also excludes companies involved in tobacco, alcohol, GMO, gambling, adult entertainment, controversial and military weapons, small arms, predatory lending, nuclear power, fossil fuels and companies with United Nations Global Compact violations, as well as various controversies. This set of exclusions is amongst the most comprehensive in the market and represents best-practice for sustainable funds, resulting in the ETF being aligned with Article 8 of the EU’s Sustainable Finance Disclosure Regulation (SFDR). 

The S&P 500 ESG Elite portfolio achieves a substantial ESG improvement, with a 40 per cent reduction in carbon footprint relative to its parent index and a 57 per cent improvement in the overall S&P DJI ESG score. The sustainability selection criteria are stricter and exceed standard ESG exclusions, as well as guidelines suggested by European regulators and professional organisations, such as Febelfin. 

Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management, says: “This new ETF is intended for investors looking for a strong sustainability profile based on the S&P 500 index universe, which is the largest and most important equity index in the world. The UBS S&P 500 ESG Elite ETF enables investors to take the next step in their sustainable journey and achieve more impact through their investments. As a market leader in sustainability ETFs, our ambition is to meet the demands of all types of ESG investors. We are proud to expand our sustainability offering in close collaboration with S&P Dow Jones Indices.” 

Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices, says: “We are very pleased to continue working with UBS Asset Management in expanding the S&P 500 ESG index ecosystem. Through our innovative indices, investors will be able to access investments that help build a sustainable future and meet the expectations of an evolving market.” 

The UBS S&P 500 ESG Elite ETF is available in a USD share class as well as currency-hedged share classes (CHF, EUR and GBP). Listings will be across key European exchanges, including the London Stock Exchange, Xetra, Borsa Italiana and SIX Swiss Exchange. 

This new ETF represents a natural next step given UBS AM’s commitment to sustainability. In February 2019, the firm launched the first ESG fund based on the S&P 500 universe. The S&P 500 ESG ETF applies less stringent criteria and is intended for investors whose aim is relatively close tracking of the 500 largest US-listed companies. That pioneering fund has been well received by investors and has gathered USD1.4 billion in assets so far.