Tag Archives: carbon

The ETF world is becoming increasingly competitive as issuers continue to line up new products to entice investors. While most try to please investors by charging low expense ratios, others have even attempted product charging a zero percent management fee. In this cutthroat competitive world, iShares has recently launched a product based on the low carbon emission idea. The newly launched iShares MSCI ACWI Low Carbon Target ETF (NYSEARCA: CRBN ) comes close on the heels of the recently launched SPDR MSCI ACWI Low Carbon Target ETF (NYSEARCA: LOWC ) by State Street. Though the two new funds are hardly distinguishable from each other and both look to provide exposure to companies with lower carbon and greenhouse gas emissions, below we have highlighted some of the details of the latest product on the block. CRBN in Focus The newly launched ETF tracks the MSCI ACWI Low Carbon Target Index to provide exposure to developed and emerging market equities with a lower carbon exposure than that of the broad market. For this purpose, the index goes overweight in companies with low carbon emissions relative to sales and per dollar of market capitalization. Also, the index supports companies that are less dependent on fossil fuels. This strategy results in the fund holding a well-diversified basket of 956 stocks. Apple occupies the top position with 1.82% exposure, followed by Microsoft (NASDAQ: MSFT ) (1.04%) and Johnson and Johnson (NYSE: JNJ ) (0.87%). Sector-wise, Financials dominates the fund with a little less than one-fourth exposure, followed by Information Technology with 13.7% allocation and Industrials with 11.7% exposure. Geographically, the U.S. takes the biggest chunk with half of the assets invested in it. This is followed by Japan (7.5%), U.K. (6.6%) and Canada (3.5%). The fund charges 20 bps in fees, including waivers. How Does it Fit in a Portfolio? The fund is a great choice for long-term investors, especially institutions looking to invest in a way that can have a positive impact on the broader economy. The impact of climate change worldwide and the detrimental consequences of the presence of greenhouse gases in the environment have become an important topic of discussion lately. People these days are more focused on socially responsible investing and the new fund is a good platform for them to do so. ETF Competition Though the socially responsible investing space has a lot of funds focusing on companies that are socially accountable, the focus on funds targeting low carbon emission companies is still quite low. However, the iPath Global Carbon ETN (NYSEARCA: GRN ) is one such product which focuses on this space. The fund tracks the Barclays Capital Global Carbon Index Total Return, which measures the performance of the most highly traded carbon-related credit plans. The ETN is, however, quite unpopular and illiquid with an asset base of under $3 million and an average volume of 4,000 shares a day. The product is also quite expensive as compared with the newly launched product and charges 75 basis points as fees. Apart from GRN, the newly launched CRBN is likely to face competition from another recently launched fund by State Street’s LOWC, as it also tracks the same index and charges the same fees. With that being said, CRBN has already established its popularity in just a few days of its launch and is presently the most successful ETF launch, by assets, since October, as per research firm XTF . CRBN has gathered roughly $137.8 million in assets since its inception on December 8 this month, while LOWC has managed to garner $71.13 million after its launch on November 25. This clearly indicates that CRBN is already winning in terms of popularity and might have great days ahead as well.