First low-carbon ETF listed on SGX to help investors go green

A new investment product on the Singapore Exchange (SGX) launched yesterday will help investors reduce the carbon footprint of their portfolios.

The Lion-OCBC Securities Singapore Low Carbon Exchange-Traded Fund (ETF), which has $60 million in assets under management, is the first low-carbon ETF here, said OCBC Bank.

It tracks the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index and offers investors access to 50 leading Singapore-listed companies and trusts with lower carbon intensity performances compared with their peers in the same sector.

The index has two ways to achieve decarbonisation: It excludes companies heavily involved in the fossil fuel industry, and only those with a low carbon intensity score make the cut.

Environmental and carbon intensity data are sourced from Sustainalytics, a research firm specialising in environmental, social and governance research.

Mr Michael Syn, SGX's head of equities, said the ETF is an effective tool for investors looking to invest in a low-carbon future while maintaining competitive returns.

Mr Gerard Lee, chief executive of Lion Global Investors, added that the ETF lets investors invest in low-carbon companies easily and at a fraction of the cost.

The ETF's board lot size is one unit costing $1 each with trading possible in Singapore and US dollars.

The management fee is 0.4 per cent a year, while the expense ratio is capped at 0.45 per cent a year for two years.

The ETF's launch brings the total global assets under management of sustainability-linked ETFs listed on the SGX to over $700 million.

Similar ETFs listed here include Lyxor MSCI China ESG Leaders ETF and UOB Apac Green Reit ETF.

The returns have not been attractive so far this year.

The UOB Apac Green Reit ETF is down 5.5 per cent while the Lyxor MSCI China ESG Leaders ETF is 24.8 per cent under, as at yesterday.