Sustainable Investing With A New ETF

Whether its a fund focused on clean energy stocks or one that tracks a benchmark excluding carbon-producing companies, there is no shortage of exchange-traded funds on the market today focusing on the sustainable investing theme.

That group grew by one last week with the debut of the iShares Sustainable MSCI Global Impact ETF MPCT. MPCT “seeks to track the investment results of an index composed of positive impact companies that derive a majority of their revenue from products and services that address at least one of the world's major social and environmental challenges as identified by the United Nations Sustainable Development Goals,” according to iShares.

Related Link: Arcadis Publishes Sustainability Report 2015

The New Index

MPCT's underlying index is the newly minted MSCI ACWI Sustainable Impact Index, which “aims to identify companies that derive at least 50 percent of their revenues from products and services that address environmental and social challenges as defined by the themes outlined above. The index, which excludes companies that fail to meet minimum environmental, social and governance (ESG) standards, weights securities by the percentage of revenue derived from products or services that address the themes,” according to MSCI.

Holdings And Allocations

The new ETF allocates over 40 percent of its weight to the United States, with France and Japan combining for another 20 percent. Fifteen countries are represented in MPCT, four of which are emerging markets.

MPCT's index is home to names familiar to U.S. investors, such as AbbVie Inc ABBV, Gilead Sciences, Inc. GILD and Dow component Procter & Gamble Co PG.

The companies found in MPCT are significantly more exposed to sustainability themes, such as basic needs, climate changes and natural capital, than are companies in the MSCI ACWI Index.

“MPCT arrives at a pivotal point in the sustainable investing market as global political, business and regulatory leaders are coming together to address climate change concerns. Its launch comes soon after the landmark COP21 Agreement and the recent inclusion of ESG standards by the Department of Labor,” said iShares in a statement.

The new, which already has $14.5 million in assets under management, charges 0.49 percent a year, or $49 per $10,000 invested.

Disclosure: Todd Shriber owns shares of AbbVie.