The VanEck Vectors MSCI Australian Sustainable Equity exchange traded fund (ETF) has been certified as a ‘responsible investment’ by the Responsible Investment Association Australasia (RIAA).
The index fund screens companies on their ownership of fossil fuels and environmental, social, and governance (ESG) performance, VanEck said.
The fund manager said MSCI screened companies based on negative and positive screens – excluding companies that own any fossil fuel reserves or derived revenue from mining thermal coal or from oil and gas related activities. It also excluded companies with business activities that were not socially responsible investments (SRI), and only included companies with high ESG performance ratings.
MSCI’s ESG consideration ratings ranged from AAA to CCC, and the VanEck fund said it only included companies given a rating of AAA, AA, or A.
VanEck managing director and head of Asia Pacific, Arian Neiron, said: “Research from academics, asset managers and index providers is mounting that good ESG performance and responsible investing can help companies achieve improved financial performance and therefore deliver greater rewards to investors”.
According to FE Analytics data, over the three years to 31 March 2020, the fund has lost 5.56%. The fund’s return sharply plummeted in line with the global sell-off starting in February 2020 due to the COVID-19 pandemic.
VanEck Vectors MSCI Australian Sustainable Equity ETF versus Australian equities sector over three years to 31 March 2020