UBS Asset Management has launched an ETF that applies ESG screening criteria to emerging market stocks while excluding China.
The UBS ETF MSCI Emerging Markets ex China Socially Responsible UCITS ETF (AW1J) is listed on Deutsche Boerse and Boerse Frankfurt with a total expense ratio (TER) of 0.20%.
AW1J tracks the MSCI Emerging Markets ex China SRI Low Carbon Select 5% Issuer Capped index which offers exposure to large and mid-cap stocks across 23 of the 24 emerging markets countries defined by MSCI, excluding China.
The index is designed to represent the performance of companies with a lower carbon footprint and outstanding ESG credentials compared to the broader market.
It also aims to avoid dominance by any single issuer, capping their maximum weight at 5%.
Taiwan is the index’s highest country exposure, at 25.6%, followed by India at 23.9% and South Korea at 15.8%.
Information technology and financials are the two highest sector weights, at 34.6% and 26.2%, respectively.
Concerns over China's deflation, geopolitical tensions and property market woes have prompted investor demand for Asia and emerging market ETFs excluding China.
UBS AM’s new strategy follows the launch of the UBS ETF MSCI Emerging Markets ex China UCITS ETF (EMXCN) last August.
Currently, the most comparable product on offer in Europe is the Amundi MSCI Emerging ex China ESG Leaders Select UCITS ETF (EMXG), applying slightly different ESG screening criteria than AW1J.
In January, UBS AM slashed the fees of over 200 ETFs, including its MSCI world, S&P 500 and emerging markets products.
