Six Park is updating two of the exchange-traded funds (ETFs) used in its Sustainable portfolios, in line with recommendations from our Investment Advisory Committee.
From the first week of November, our portfolios will contain IESG for exposure to Australian shares with sustainable characteristics, and IHWL for hedged exposure to global shares with sustainable characteristics. Both are new offerings from iShares by BlackRock, which is fast becoming a global leader in sustainable investing.
These will replace E200 (State Street) and HETH (BetaShares). Read more about our selected ETFs.
“The investment landscape is constantly changing, and we’re committed to using the most suitable ETFs available for our clients,” Six Park co-founder Pat Garrett says.
“When we launched our Sustainable portfolios in December 2020, we noted that we would consider new sustainable ETFs if and when they became available. We fully expected growth in both the number and quality of ETFs on offer, and that’s proven to be the case in 2021.”
BlackRock Head of iShares Wealth Chantal Giles said the company had seen a broader base of Australian and global investors using sustainably-oriented ETFs as core building blocks within their portfolios.
“We believe climate risk is investment risk and sustainability-integrated portfolios are likely to outperform traditional market-cap weighted portfolios over the long term,” Ms Giles said.
“What was once seen as a thematic or satellite holding is increasingly being viewed as a critical consideration as investors look to incorporate sustainability goals to improve the overall resilience of their portfolios.”
Why is Six Park changing the ETFs in its Sustainable portfolios?
Our investment committee recommended the new ETFs after careful assessment and analysis. They found that IESG and IHWL both adopt more extensive sustainability screening processes while remaining true to our investment objectives and offering lower underlying costs than the ETFs currently being used. Read more about our Sustainable portfolios.
Blackrock iShares launched IESG in June 2021. IESG aims to provide investors with the performance of the MSCI Australia IMI Custom ESG Leaders Index, before fees and expenses. Its objective is to provide exposure to large, mid and small cap segments of the Australian market with better sustainability credentials relative to their sector peers.
IESG offers a more comprehensive ESG screening process than E200 as well as lower management costs. While still relatively small with a short trading history, the fund is growing rapidly.
IESG has higher exposures to healthcare, real estate and consumer discretionary stocks, with lower exposure to financials than E200, due to its more extensive screening process. At a minimum, IESG endeavours to screen out companies with involvement in controversial weapons, UN Global Compact violators, nuclear weapons, thermal coal, tobacco, civilian firearms and oil sands.
IHWL aims to provide investors with the performance of the MSCI World Ex Australia Custom ESG Leaders Index 100% Hedged to AUD, before fees and expenses. The index is designed to measure the AUD hedged performance of global, developed market large and mid-capitalisation companies with better sustainability credentials relative to their sector peers.
IHWL has a lower underlying cost than HETH (0.14% vs 0.67%) and a superior ESG rating from MSCI (AA vs A). It also offers significantly higher diversification, including 720 stocks compared with HETH’s 200.
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