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BlackRock and SGX launch $580m climate action fund, Singapore’s largest equity ETF

First Published by The Straits Times on SEP 14, 2023, 10:33 PM SGT

Associate Editor & Senior Columnist

SINGAPORE - The Singapore Exchange (SGX) and BlackRock, the world’s largest asset manager, have rolled out a landmark climate action fund to spur sustainable investing in Asia.

The iShares MSCI Asia ex-Japan Climate Action ETF (exchange-traded fund) has assets under management of US$426 million (S$580 million) – making it the largest equity ETF launched in Singapore.

ETFs track the performance of a specific index, which comprises a group of underlying assets or stocks.

In doing so, ETFs provide investors with a more diversified base of investments compared with investing in individual stocks.

The new fund will track companies as they progress along their low-carbon emissions journey.

It is anchored by Prudential, one of the region’s largest asset owners, with the backing of a consortium of investors that include Temasek and Singlife.

BlackRock said the ETF represents an evolutionary step in the development of the global low-carbon transition investment ecosystem, giving investors convenient access to best-in-class companies across the Asia-Pacific (ex-Japan) committed to reducing carbon emissions.

It added that the fund would be ideal for investors with low-carbon transition objectives, given that it provides open access to pioneering companies at the forefront of the low-carbon transition.

Mr Peter Loehnert, Asia-Pacific head of iShares and index investments at BlackRock, noted that the Asia-Pacific is the largest and fastest-growing region for energy transition investment, offering transformational opportunities for investors with climate-focused objectives.

He said: “Investors globally are increasingly choosing iShares ETFs as ideal vehicles to align portfolio allocations and implement low-carbon transition goals. This new ETF will provide them with an innovative, unique and powerful building block to access companies in the region leading the transition.”

This is the third iShares ETF climate building fund built to track MSCI Climate Action Indexes, and comes three months after launches in the United States and Japan.

Priced with an annual management fee of just 0.18 per cent, the fund will track the MSCI Asia ex-Japan Climate Action Index, which provides exposure to the top 50 per cent of companies in the global industry classification standard sector, based on factors including approved science-based targets, management of climate risks and green business revenue.

Mr Michael Syn, senior managing director and head of equities at SGX Group, reckons the listing will mobilise capital and develop solutions to effect real change in addressing climate change.

“With the market and investors signalling their readiness for it, we have been working in partnership with BlackRock and MSCI to create a new global ecosystem of climate-related instruments such as this ETF and the climate action derivatives that were launched earlier this year,” he said.

“By providing these tools, we are supporting investors in building a diversified portfolio of climate-conscious assets, enabling them to do their part for the transition while benefiting from the potential financial upside.”

Prudential group chief investment officer Don Guo said that as anchor investor of the new fund, the firm was investing in companies demonstrating transition leadership, consistent with its own aspirations to facilitate a systematic green transformation across all sectors.

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