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Fidelity just launched three sustainability-focused ETFs

The asset manager Fidelity jumps on the sustainability trend and launches suitable ETFs – with one special feature: the stock selection is based on the assessments of its own analysts. Meanwhile, its competitor Amundi is expanding its “good conscience” range and also listed eight ETFs with a sustainable orientation on the Frankfurt Stock Exchange, based on barometers of the provider MSCI.

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The fund company Fidelity International complements its product range with three exchange-traded index funds (ETFs) that pursue a sustainable investment strategy. The funds track indices developed by the company itself, each focusing on global, US, and European equities. The barometers include stocks of companies that receive good ratings in the in-house sustainability rating. The Fidelity analysts select companies with positive prospects and a sustainable business model.

The asset manager introduced its own sustainability rating in the summer of 2019, which assesses companies according to ecological and social criteria as well as aspects of good corporate governance (ESG). The reason for the in-house development at the time was that existing ESG ratings relied heavily on the information provided by the companies and were too focused on the past and too little on the future. The provider had started to build up a range of sustainable, active funds in the autumn.

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ETFs and sustainability criteria should not be ignored

Now, the company is also launching products in the passive field. The three ETFs have been listed on the German and London stock exchanges since June 3rd. The running costs of the Fidelity Sustainable Research Enhanced series range between 0.30 and 0.35 percent per annum. Depending on the region, the portfolios contain between 250 and 500 stocks, whose weighting is rebalanced quarterly.

Christian Machts, Head of Third-party Sales Germany, Austria and Eastern Europe at Fidelity, explained the decision to launch the ESG ETFs when presenting the new series with the significant growth experienced by the combination of sustainability and passive investments. “For anyone involved in asset management, these are issues to deal with and a position to hold. These are not to be ignored under any circumstances.”

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ETF head Nick King described the new funds as a kind of hybrid between active and passive products. “They offer broad access to the markets, but are focused on stocks with a strong fundamental and sustainable outlook.” He emphasised that Fidelity’s sustainability rating not only captures the existing ESG profile of companies, but also their efforts to make their business more sustainable. “So the funds provide fundamental research on the costs of passive investing.”

ETFs play a crucial role on the stock market

One day earlier, on June 2nd, the French fund giant Amundi had also listed eight ETFs with a sustainable orientation on the Frankfurt Stock Exchange. The funds are based on barometers of the provider MSCI and cost 0.15 to 0.18 percent annually. They cover global, US, European and eurozone equities.

“ETFs and index investments will play a decisive role for all investor groups in helping sustainable investment strategies to achieve a further breakthrough,” said Fannie Wurtz, Head of Amundi ETF, Indexing & Smart Beta. “With the new ESG ETFs we are also taking into account the fact that experience shows that there are no standard solutions for ESG investments that meet the needs of all investors.” The company will launch more sustainable ETFs, Wurtz announced.

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Valerie Harrison is a mom of two who likes reporting about the world of finance. She learned about the value of investing at a young age upon taking over her family's textile business when she was just a teenager. Valerie's passion for writing can be traced back to working with an editorial team at her corporate job, where she spent significant time working on market analysis and stock market predictions. Her portfolio includes real estate funds, government bonds, and equities in emerging markets such as cannabis, artificial intelligence, and cryptocurrencies.