State Street Global Advisors has announced that four of its Australian-based SPDR ETFs will begin tracking new indices starting in February next year.
The firm said that the updates were designed to improve the environmental, social and governance (ESG) profiles of the four funds and were made in response to demand from investors for improved sustainability scores and lower greenhouse gas emissions.
“Investors around the world are increasingly looking to adopt ESG more broadly across their portfolios. They are looking to support the economic transition to net zero carbon emissions, mitigate risk and express their values and preferences through their investments,” said Meaghan Victor, State Street Global Advisors head of SPDR ETF Asia-Pacific distribution.
“With improved data sets and index innovation, we are now able to provide core ESG exposures across more asset classes using ETFs.”
Under the changes, the SPDR Dow Jones Global Real Estate Fund (DJRE) will be renamed the SPDR Dow Jones Global Real Estate ESG Fund and will become Australia’s first ESG Global Real Estate ETF according to State Street.
It will track the Dow Jones Global Select ESG Real Estate Securities Index (RESI) (AUD) which uses GRESB’s real estate ESG assessment on areas including energy and water usage, carbon emissions and leasable area covered by green building certifications.
Additionally, the SPDR S&P Emerging Markets Fund (WEMG) will become the SPDR S&P Emerging Markets Carbon Control Fund and track the S&P Emerging LargeMidCap Carbon Control (AUD) Index accessing large and mid cap shares in emerging markets.
State Street said this change would allow Australian investors to access a reduced carbon emissions emerging markets ETF for the first time.
The SPDR S&P World ex Australia Fund (WXOZ) will change its name to the SPDR S&P World ex Australia Carbon Control Fund and track the S&P Developed ex-Australia LargeMidCap Carbon Control Index.
Meanwhile, the hedged version of the fund (WXHG) will be renamed the SPDR S&P World ex Australia Carbon Control (Hedged) Fund and will track the S&P Developed Ex-Australia LargeMidCap Carbon Control AUD Hedged Index.
WEMG, WXOZ and WXHG will utilise carbon data from S&P Global Trucost to reduce their weighted average carbon intensity, and all four funds will exclude securities that fail to pass ESG-focused screens.
“As you would expect from the SPDR ETF range, the new indices have been chosen for their quality, liquidity and transparency,” said Ms Victor.
“They allow us to continue to provide ETFs that align with investor needs and values. These enhancements will ensure the funds evolve to meet investor preferences for ESG while still focusing on their risk return profile.”
State Street said that the changes were not expected to significantly alter the risk-return profile of the funds and management fees would remain the same.
“Importantly, these funds will continue to deliver investment characteristics similar to their original benchmarks, which means investors can access improved ESG criteria without compromising their portfolio,” said Ms Victor.
Last year, State Street launched the SPDR S&P/ASX ESG Fund (E200) which was the first ETF to track the S&P/ASX ESG index.
