Legal & General Investment Management (LGIM) has expanded its commodities range with the launch of an energy transition ETF.
The L&G Energy Transition Commodities UCITS ETF (ENTR) is listed on the London Stock Exchange, Deutsche Boerse, Borse Italiana and the Six Swiss Exchange with a total expense ratio (TER) of 0.65%.
The ETF tracks the Solactive Energy Transition Commodities index which captures 18 commodities through futures that are relevant to the energy transition.
To achieve exposure, ENTR enters into a swap agreement to gain exposure to the index.
These include transition metals, transition energy and carbon emissions pricing.
Commodity exposures in the index are equally weighted with a fixed allocation to carbon markets.
Metals that are expected to see demand increase more significantly – such as aluminium, copper and nickel – are given a double-weighting in the index.
‘Supporting metals’ that are expected to see slightly less demand such as lead, tin and zinc, are not given double weightings.
Index weights are also adjusted based on contract liquidity and the ETF’s assets under management.
The index also includes transition energy commodities such as natural gas, with exposures divided between European and US futures as well as ethanol.
Finally, carbon pricing constituents include European Carbon Allowances, California Carbon Allowances and Regional Greenhouse Gas Initiative.
Aanand Venkatramanan (pictured), head of ETFs, EMEA at LGIM, said: “We are incredibly excited to bring this innovative commodities ETF to market, providing a truly unique proposition which enables investors to seek to benefit from the significant growth potential of the energy transition, while also providing inflation risk mitigation and uncorrelated exposure.”
The launch adds to LGIM’s three-strong range of commodity ETFs including the L&G All Commodities UCITS ETF (BCOM), the L&G Longer Dated All Commodities UCITS ETF (COMF) and the L&G Multi-Strategy Enhanced Commodities UCITS ETF (ENCO).
It is the latest launch since the UK asset manager unveiled a global brands ETF last September, aiming to invest in a “diversified portfolio” of the world’s most valuable brands.
