Europe’s first actively managed, sustainable exchange-traded fund with a carbon offset is to be launched by Saturna Capital and HANetf on the London Stock Exchange this month.
The Saturna Sustainable ESG Equity HANzero UCITS ETF (LON:SESG) will be the second ETF in Europe and the second on the HANetf platform to incorporate carbon offsetting, working with carbon offset specialists South Pole to directly neutralise the carbon emissions of each investment in the portfolio.
Under the active management process from Saturna, the ETF will follow the same investment strategy as the asset manager’s US-based sustainable equity mutual fund, which launched in 2015 and is run by the same managers, Jane Carten and Scott Klimo.
The fund positively screens for ESG factors such as companies demonstrating excellent corporate governance, a commitment to reducing environmental impact in the areas of carbon emissions, water and waste and positive social characteristics, Saturna said.
Negative screening excludes companies engaged in higher ESG risk businesses, such as excluding alcohol, weapons, gambling or fossil fuel extraction.
The fund invests around the world and is ‘benchmark agnostic’ in terms of geographic and industry allocations.
“Saturna Capital has managed socially responsible investments via its US-based family of Shariah-compliant funds since the firm’s founding in 1989,” said Carten, who is also CEO of Saturna.
She added: “Saturna Capital believes that companies proactively managing business risks relating to ESG issues make better contributions to the global economy and are more resilient… We believe that companies proactively managing business risks related to ESG issues are more resilient and make better contributions to portfolios designed for patient investors.”
Hector McNeil, co-CEO of HANetf, said “Active ETF assets are currently small given the size of the overall industry, but growth is strong. ETFGI recently reported that assets invested across active EFTs and ETPs had reached a record $329 by the end of Q1 this year.
“The well-recognised advantages of ETFs – intra-day trading, shortability, lendability, having an ETF portfolio held in one venue, portability of positions between trading venues, low entry costs and diversification – are becoming more prevalent. This gives investors the option to gain exposure to the same active investment strategies they already own via an ETF wrapper. It’s time to bring these benefits to the active management space, creating more choice and more opportunity for both institutional and retail investors.”