Asset manager BlackRock and the Singapore Exchange (SGX) have jointly launched a climate action fund in Singapore with $426 million in assets under management (AUM).
The fund, called the ‘iShares MSCI Asia ex-Japan Climate Action ETF’, is the largest equity ETF (exchange-traded fund) launched in the city-state and will be used to invest across Asia, The Straits Times reported on Thursday.
An ETF is a financial instrument that tracks a particular index, comprising a group of stocks.
The new fund is reportedly backed by insurance giant Prudential and a group of investors including Singapore’s state investor Temasek and digital insurance company Singlife, and it will track companies on their journey to reduce carbon emissions.
BlackRock, the ETF’s creator, reportedly said it’s a significant step in the global shift towards low-carbon investments that offer easy access to top-performing companies in Asia-Pacific—excluding Japan—that are committed to cutting emissions, making it ideal for investors with similar goals.
Peter Loehnert, BlackRocks’ Asia-Pacific head of iShares and index investments, reportedly emphasised the growing significance of the Asia-Pacific region in the realm of energy transition investments and highlighted the transformational opportunities available to investors with a strong focus on climate-related goals.
“Investors from around the world are increasingly turning to iShares ETFs as effective tools for aligning their portfolio strategies with low-carbon transition objectives. This new ETF represents an innovative and powerful building block that enables them to access leading companies in the region actively driving the transition,” he said.
The fund, which reportedly has an annual management fee of 0.18%, will track the MSCI Asia ex-Japan Climate Action Index.
According to The Straits Times, this fund is the third iShares ETF climate-building fund that tracks one of the MSCI Climate Action Indexes. Two such funds were reportedly launched by BlackRock three months ago in the US and Japan respectively.
The index provides information on the top 50% of companies in the global industry classification standard (GICS) sector, which are chosen according to factors such as approved science-based targets, climate risk management, and revenue from environmentally-friendly businesses.
BlackRock ended Q2 this year with $9.4 trillion in assets under management (AUM), up from $8.5 trillion a year earlier and $9.1 trillion in Q1.
Aside from its expansion into green investments in the US and Asia, the New York-based investment firm also announced last month that it will be joining hands with New Zealand’s government to launch a $1.22 billion climate infrastructure fund to invest in solar, wind, green hydrogen and battery storage technology in the country.