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UBS Expands its Impact Investing With New Exchange Traded Fund

Anyone who has kept up with UBS’s investment strategy over the past few years probably knows the Swiss banking giant has established itself as a leader in the realm of Environmental, Social, and Corporate Governance (ESG) investments. The company’s latest foray into ESG, which it announced last month, is an exchange-traded fund that focuses solely on socially responsible investments. 

The ETF, launched by UBS Asset Management, is listed on three European exchanges and the S&P 500 ESG Elite Index, part of the S&P Dow Jones Indices. A March 15 article on the ETF Strategy website noted that the underlying reference index “is designed to comprise only the cream of S&P 500” companies as measured by ESG criteria. Those companies include Microsoft, Visa, UnitedHealth, Nvidia, Mastercard, Home Depot, and Adobe. 

Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management, said in a statement that the UBS S&P 500 ESG Elite ETF “enables investors to take the next step in their sustainable journey and achieve more impact through their investments. As a market leader in sustainability ETFs, our ambition is to meet the demands of all types of ESG investors. We are proud to expand our sustainability offering in close collaboration with S&P Dow Jones Indices.”

Officials at S&P Dow Jones Indices sound equally happy to be associated with UBS.

“We are very pleased to continue working with UBS Asset Management in expanding the S&P 500 ESG index ecosystem,” said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices. “Through our innovative indices, investors will be able to access investments that help build a sustainable future and meet the expectations of an evolving market.”

The latest ETF continues a years-long effort on the part of UBS to expand its holdings in ESG and impact investing. As noted in a March 9 article on Barron’s, Mark Haefele, chief investment officer at UBS Global Wealth Management, began to take a closer look at socially and environmentally responsible investments in the mid-2010s.

Most impact investing back then involved comparatively small transactions of $1 million to $3 million. Haefele figured that as one of the world’s biggest wealth management firms, UBS could have a major impact on social and environmental challenges by finding a way to “put some zeros behind those initiatives.”

To that end, UBS started the $471 million Oncology Impact Fund in April of 2016. The fund is managed by U.S. venture firm MPM Capital and aims to speed up the process of finding cures for cancer by investing in early-stage therapies. Money from the fund is also used to finance grants for academic cancer therapy research, and to widen access to cancer care in developing countries. 

In January of 2017, UBS established a five-year goal of raising $5 billion to fund investments that address the United Nations Sustainable Development Goals (SDGs), which range from reducing poverty and hunger to promoting clean energy, clean water, gender equality, sustainable cities, and responsible consumption.

At the time, the $5 billion goal was considered bold, Haefele said. “There were people in the business who were concerned about putting out targets like that.”

But by the second half of 2020, UBS had met the goal more than a year ahead of schedule.

Last year, UBS announced it would recommend sustainable investing options to its clients above traditional investments. Sustainable and impact investing are now at the company’s core. Its ESG strategy, as detailed on its website, centers on a number of different categories, with much of the focus on education, healthcare, clean energy, economic development, and waste management/recycling. 

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