UBS launches socially responsible ETF
UBS has launched a new socially responsible ETF in Germany, which offers investors exposure to Japanese companies that meet strict environmental, social, and governance criteria. The ETF is based on the MSCI Japan Socially Responsible Index, which among other things, negatively screens out companies that are inconsistent with specific values based on criteria such as mainstream religious beliefs, moral standards, or ethical views. Socially responsible finance appears to be an area of continued growth, largely reflecting cultural change in Western societies.
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UBS, a leading European provider of exchange-traded funds, has expanded its suite of socially responsible ETFs with the launch of the UBS ETF – MSCI Japan Socially Responsible ETF on the London Stock Exchange, Xetra and Börse Frankfurt. The new ETF offers investors exposure to Japanese companies meeting strict environmental, social and governance (ESG) criteria.

By avoiding companies exposed to social and environmental risks, and targeting those with strong corporate governance systems, the fund offers the potential for long-term sustainable returns whilst adhering to sound socially responsible values.

“Investors are increasingly looking to access companies whose business activities are in harmony with social values and whose approach to managing environmental, social and corporate governance risks is first-rate”, said Andrew Walsh, Head of UBS ETF Sales UK & Ireland. “It follows that deciding to invest in a sustainable way isn’t about following a trend. On the contrary, the investment decision is primarily about striving for values and sustainability.”

According to UBS, socially responsible investment, performance and diversification are not mutually exclusive.

The ETF is based on the MSCI Japan Socially Responsible Index. Whilst this index holds fewer constituents than the parent MSCI Japan index, a function of the socially responsible index’s exclusion criteria, it has tracked the parent index quite closely over the past five years and has actually performed slightly better through that period.

The index aims to include those companies with the highest ESG ratings in their own sectors. By doing this, it seeks to ensure that only companies operating in ways that are socially and environmentally beneficial are included. The ratings are generated by MSCI and are based on an analysis of each company’s management of its ESG performance. Through negative screening, the index excludes companies that are inconsistent with specific values based on criteria such as mainstream religious beliefs, moral standards or ethical views.

The ETF has a total expense ratio of 0.40%.

The new ETF enhances the existing UBS SRI offering tracking the MSCI Global SRI Index family.

The full list of UBS SRI ETFs is below (LSE listings quoted):