Invesco MSCI ESG Universal Screened UCITS ETFs

ESG integration with key exclusions, designed for core exposure

Passive ETFs tracking customised versions of MSCI ESG Universal indices

Choice of exposures to USA, Europe and the World

Low cost, transparent and efficient ETF structure

Passive, low cost exposure to integrated ESG approach

At Invesco, we have been implementing ESG into portfolios for more than 30 years, and this experience has taught us that the needs and objectives of investors can vary. Exclusions may be most important for some investors, while performance may be more important for others. We don’t think investors need to sacrifice one for the other.

For investors looking for an ESG approach suitable for core equity exposure, we have created a new range of ETFs that each aim to track the performance of a customised version of the MSCI ESG Universal index, which incorporates “ESG Momentum” designed to increase weighting to companies that are actively improving their ESG profile. MSCI has over 40 years’ experience in measuring ESG performance, covering more than 7,000 companies globally.1

The strategy aims to:

  • Increase overall exposure to those companies demonstrating both a robust ESG profile as well as a positive trend in improving that profile,
  • Avoid companies involved in certain controversial business practices or that do not have an ESG score.

 

Index methodology

Following the exclusion of any company that doesn’t have an ESG score or is involved in the most controversial activities, the index reweights the remaining securities according to their combined ESG scores. The score reflects MSCI’s assessment of both the security’s current ESG rating, as well as the trend in that rating, defined as the change in the security’s ESG rating over time.

The Index is reviewed and rebalanced on a semi-annual basis. It is also reviewed quarterly to ensure no constituent has been involved in a controversial business practice in the previous quarter.

 

Why may a strong and positively trending ESG score be important?

A company with a strong ESG profile could have certain characteristics that flow through to greater profitability and lower risks.

Source: MSCI ESG Research, “Foundations of ESG Investing, Part 1: How ESG Affects Equity Valuation, Risk and Performance”, November 2017

Find out more about MSCI’s research

 

Invesco MSCI ESG Universal Screened UCITS ETFs

The ETFs aim to deliver the performance of the relevant index by investing physically in the securities of the index, which provides us the right to vote. Proxy voting is an integral part of our investment process at Invesco, for active and passive strategies. We believe that the right to vote proxies should be managed with the same care as all other elements of the investment process, and we vote for proposals that, in our view, can maximize long-term shareholder value.

As a proxy held by a passive ETF, it will be voted in line with the majority holder of the active-equity shares held by Invesco. This enables us to leverage the active-equity expertise and comprehensive proxy voting reviews conducted by their teams.

 

What about cost?

We don’t think investors need to pay more for their core exposure by including ESG integration. We are pricing our new ETFs to be extremely competitive with our other low-cost core exposures.

Historical performance

In terms of their suitability for core exposure, past performance (simulated and actual) of the indices has been broadly in line with the returns of the parent MSCI indices.

  May '18 - May '19 May '17 - May '18 May '16 - May '17 May '15 - May '15 May '14 - May '15 Dec '17 - Dec '18 Dec '15 - May '18
MSCI World ESG Universal Select Business Screen Net Return USD Index 0.63% 12.01% 16.87% -4.17% 6.33% -8.18% 21.24%
MSCI World Net Return USD Index -0.29% 11.57% 16.42% -3.96% 5.70% -8.71% 20.13%
MSCI Europe ESG Universal Select Business Screen Net Return USD Index 0.46% -0.10% 14.50% -9.90% 20.20% -10.64% -0.33%
MSCI Europe Net Return USD Index -0.66% 0.99% 15.83% -11.31% 18.46% -10.57% 1.13%
MSCI USA ESG Universal Select Business Screen Net Return USD Index 4.53% 16.35% 18.52% -0.01% 13.51% -3.08% 33.37%
MSCI USA Net Return USD Index 3.11% 13.81% 16.87% 0.31% 11.37% -5.04% 27.62%

Source: MSCI/Bloomberg, to 31 May 2019. Performance for the MSCI ESG Universal Select Business Screen NTR Indices have been simulated prior to 26 April 2019. Past performance (actual or simulated) is not a guide to current or future returns.

 

Sector allocations versus MSCI indices

After applying exclusions and re-weighting the indices based on ESG Profile and Trend scores, the following provides an indication on the sector comparisons versus the parent MSCI indices.

World

Europe

USA

Source: MSCI/Invesco, as at 30 May 2019

For more information

Please see the relevant Product pages for further information, including fees and trading details.

Invesco MSCI World ESG Universal Screened UCITS ETF

Invesco MSCI Europe ESG Universal Screened UCITS ETF

Invesco MSCI USA ESG Universal Screened UCITS ETF

 

1Source: MSCI ESG Research, as at June 2019. Years’ experience includes legacy companies KLD, Innovest, IRRC and GMI Ratings.

Investment risks

The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.

Performance may be adversely affected by variations in the exchange rates between the base currency of the fund and the currencies to which it is exposed.

Some of the funds might be concentrated in a specific region or sector or be exposed to a limited number of positions, which might result in greater fluctuations in the value of the fund than for a fund that is more diversified.

The value of equities and equity-related securities can be affected by a number of factors including the activities and results of the issuer and general and regional economic and market conditions. This may result in fluctuations in the value of the fund.

The funds intend to invest in securities of issuers that manage their ESG exposures better relative to their peers. This may affect the funds’ exposures to certain issuers and cause the funds to forego certain investment opportunities. The funds may perform differently to other funds, including underperforming other funds that do not seek to invest in securities of issuers based on their ESG ratings.

Important information

This information is for discussion purposes only and is intended only for professional investors in Austria, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden and the UK, and Qualified Clients in Israel. Marketing materials may only be distributed in other jurisdictions in compliance with private placement rules and local regulations.

Data as at 7 June 2019, unless otherwise stated.

All investment decisions must be based only on the most up to date legal offering documents. The legal offering documents (fund and share class specific Key Investor Information Document (KIID), prospectus, annual & semi-annual reports, articles & trustee deed) are available free of charge on our website etf.invesco.com and from the issuers.

This communication should not be considered financial advice. Persons interested in acquiring the product should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences.

Any calculations and charts set out herein are indicative only, make certain assumptions and no guarantee is given that future performance or results will reflect the information herein. For details on fees and other charges, please consult the prospectus, the KIID and the supplement of each product.

UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.

The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus contains a more detailed description of the limited relationship MSCI has with Invesco and any related funds.

For the full objectives and investment policy please consult the current prospectus.

German investors may obtain the offering documents free of charge in paper or electronic form from the issuer or from the German information and paying agent (Marcard, Stein & Co AG, Ballindamm 36, 20095 Hamburg, Germany).

In Israel, the contents of this communication are restricted to Qualified Clients (pursuant to the First Schedule to the Israeli Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995) only and are not intended for retail or private investors who are not Qualified Clients.

The publication of the supplement in Italy does not imply any judgment by CONSOB on an investment in a product. The list of products listed in Italy, and the offering documents for and the supplement of each product are available: (i) at etf.invesco.com (along with the audited annual report and the unaudited half-year reports); and (ii) on the website of the Italian Stock Exchange borsaitaliana.it.

Communicated by Invesco, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, authorised and regulated by the Financial Conduct Authority; Invesco Asset Management SA, 16-18 rue de Londres, 75009 Paris, France; and Invesco Asset Management Deutschland GmbH, An der Welle 5, 60322 Frankfurt am Main, Germany. 

EMEA 4420/2019