SYDNEY, 22 March 2021 State Street Global Advisors, the asset management arm of State Street Corporation (NYSE: STT), today announced that research house, Lonsec, has awarded two of State Street Global Advisors’ environmental, social and governance (ESG) funds with ‘Recommended’ ratings.
SPDR’s ESG ETF -- E200 -- listed on the ASX on 5 August 2020, has received its first rating from Lonsec. It provides a similar risk and return profile to the S&P/ ASX 200 Index with enhanced ESG features. Its ESG characteristics are achieved through exclusionary screening and best-in-class rankings.1
Lonsec said State Street Global Advisors was a leading global manager in the global ETF market, with scale and resources to effectively manage and structure ETFs.
“This Australian equities fund invests in large capitalization stocks that have recognizable ESG characteristics, replicating the performance of a responsible investing aware index,” they said.
“The ETF’s Managed Expense Ratio (MER) is much lower compared to similar ESG ETFs on the ASX and the index’s underlying screening process is effective with clear criteria.”
E200 provides low-cost exposure to the S&P/ASX 200 Index, with a focus on companies with strong ESG characteristics, while also removing companies interacting with tobacco and controversial weapons, companies that generate 5% or more of their revenue from thermal coal and companies with low UN Global Compact (UNGC) scores. In addition, those with S&P DJI ESG Scores in the bottom 25% of companies within their industry groups are excluded.
The State Street Climate ESG International Equity Fund (the Fund) also received a ‘Recommended Index’ rating. Lonsec welcomed State Street Global Advisors’ mitigation and adaption approach to integrating climate objectives into portfolio construction while also leveraging a best-in-class ESG data platform.
“The Fund has been designed to align with global climate goals stipulated in the Paris Accord and the RCP 2.6 climate scenario developed by the Intergovernmental Panel on Climate Change,” they said.
“This has been done while seeking to provide investors with a broad-based global equity performance return profile and with an attractive MER.”
It has been designed to meet specific climate related objectives and ESG themes, while providing a broad-based exposure to global equity markets. It aims to achieve capital growth and income in line with the MSCI World ex-Australian Index while delivering on climate and ESG objectives. The Fund allocates higher weightings to companies with better overall ESG profiles determined by State Street Global Advisors’ ESG scoring system, R-Factor™.
State Street Global Advisors Head of Investments Australia Jonathan Shead said the funds had received significant interest from investors.
“We’ve leveraged our global insights and access to leading data providers to bring funds to Australian investors that may better align with their values, that help manage the financial risks of climate change and poor ESG practices, that are widely diversified and that are relatively low-cost,” he said.
“These funds provide access to equities with clearly labelled and defined ESG characteristics without a price premium.”
Following this review, State Street Global Advisors now has more than 12 ETFs and four managed funds with ‘Recommended’ or ‘Highly Recommended’ ratings from Lonsec.
1 “Best-in-class” is an industry term referring to an investment approach that selects companies with high ESG scores relative to their industry/sector peers.
Important Risk Information: Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441) ("SSGA, ASL"). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia · Telephone: 612 9240-7600 · Web: www.ssga.com.
SSGA, ASL is the issuer of interests and the Responsible Entity for the ETFs which are Australian registered managed investment schemes quoted on the AQUA market of the ASX or listed on the ASX.
This material is general information only and does not take into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. You should seek professional advice and consider the product disclosure document and target market determination, available at www.ssga.com/au, before deciding whether to acquire or continue to hold units in an ETF. This material should not be considered a solicitation to buy or sell a security.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF's net asset value. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.
Investing involves risk including the risk of loss of principal.
Diversification does not ensure a profit or guarantee against loss.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
Responsible-Factor (R-Factor) scoring is designed by State Street to reflect certain ESG characteristics and does not represent investment performance. Results generated out of the scoring model is based on sustainability and corporate governance dimensions of a scored entity.
SPDR and Standard & Poor's® S&P® indices are trademarks of Standard & Poor's Financial Services LLC and have been licensed for use by State Street Corporation. ASX®, a registered trademark of ASX Operations Pty Limited, has been licensed for use by SSGA, ASL. SPDR products are not sponsored, endorsed, sold or promoted by any of these entities and none of these entities bear any liability with respect to the ETFs or make any representation, warranty or condition regarding the advisability of buying, selling or holding units in the ETFs issued by SSGA, ASL.
The rating issued 02/2021 SPDR S&P/ASX 200 ESG Fund & 02/2021 State Street Climate ESG International Equity Fund are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2020 Lonsec. All rights reserved.
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