The new ETF will offer investors a reduction in carbon intensity of at least 30% versus the MSCI World index
J.P. Morgan Asset Management (JPMAM) has launched a carbon transition ETF, offering investors access to global equities and a “meaningful reduction” in carbon intensity.
The JPMorgan Carbon Transition Global Equity UCITS ETF (JPCT) seeks to provide core global equity exposure with a low tracking error against the MSCI World index, but will track the JPMorgan Asset Management Carbon Transition Global Equity index, which was built to achieve a reduction in carbon intensity without relying on exclusions or sector deviations.
JPCT will offer investors a reduction in carbon intensity of at least 30% versus the MSCI World index, and a year-on-year decarbonisation target of at least 7%, which it will do utilising a proprietary research framework to identify the companies most aligned with the transition to a low carbon economy.
The fund is underpinned by a carbon transition quantitative investment framework, which aims to separate the leaders from the laggards by evaluating firms’ production of direct and indirect emissions, along with their plans to manage and reduce those emissions, how they manage resources, such as electricity, water and waste, and other climate-related risk management considerations, including physical and reputational risks.
Underweight and overweight positions will be determined by this framework, which brings together primary and alternative data sources to guide the ETF.
Managed by JPMAM sustainable investing and quantitative beta solutions CIO Yazann Romahi and portfolio manager Aijaz Hussain, JPCT is available to investors on the London Stock Exchange, Borsa Italiana and Deutsche Börse Xetra for a total expense ratio of 0.19%.
Olivier Paquier, head of ETF distribution in EMEA at JPMAM, said: “Many investors are considering the carbon transition readiness of their portfolios, coupled with a need to maintain broad diversification, a low tracking error and cost-efficiency.
“Our carbon transition global equity ETF should help meet those needs, as clients look to integrate low carbon transition considerations when investing in global equities.”
Jennifer Wu, global head of sustainable investing at JPMAM, added: “Investing in carbon transition aware strategies needs to start now. Differences are emerging, between the potential winners and losers in the low carbon transition, and by acting early, before climate risks and opportunities are fully priced in, investors can capture potentially significant returns as prices continue to adjust.”