4 min readBy Ron Koren ETF Insider
How does the SDGS ETF work?
The SDGS ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The BlackRock-advised Funds, in alignment with their investment objective, seek to track the MSCI ACWI Sustainable Impact Index, developed by MSCI Inc. This index exclusively includes companies addressing major social and environmental challenges defined by the United Nations Sustainable Development Goals (UN SDGs). To be eligible for inclusion, companies must derive at least 50% of their sales from sustainable impact categories and meet minimum environmental, social, and governance (ESG) standards. As of August 31, 2023, the index comprised companies from 29 countries or regions, covering various industries like consumer staples, healthcare, and real estate. The fund employs a representative sampling indexing strategy to manage assets, aiming for an investment profile similar to the underlying index while minimizing costs and turnover. With at least 80% of assets invested in the index's component securities, the fund may also utilize futures, options, and swaps to track index performance before fees and expenses. Additionally, the fund may lend securities and adheres to an industry concentration policy in line with the index's concentration levels. Sponsored by MSCI, the index's composition and weightings are independent of the fund and BlackRock Financial Advisors (BFA).
SDGS Dividend, guided by its investment strategy, endeavors to align with the United Nations Sustainable Development Goals (SDGs) while pursuing dividend-oriented returns. The fund aims to invest in companies that not only demonstrate a commitment to addressing social and environmental challenges but also have a track record of generating consistent dividend income for investors. By focusing on companies that contribute positively to sustainable development and maintain strong dividend-paying histories, SDGS Dividend seeks to provide investors with a dual benefit of financial return and social impact. Through careful selection and active management, the fund aims to deliver competitive dividend yields while promoting sustainability and addressing global societal issues outlined by the SDGs.
SDGS Tracking is dedicated to mirroring the performance of the MSCI ACWI Sustainable Impact Index, meticulously crafted to reflect companies that actively address key social and environmental challenges outlined by the United Nations Sustainable Development Goals (SDGs). By employing a rigorous tracking methodology, the fund ensures that its investment portfolio closely aligns with the composition and weightings of the underlying index. SDGS Tracking focuses on companies with a significant portion of their revenue derived from sustainable impact categories, maintaining high environmental, social, and governance (ESG) standards. With a commitment to transparency and responsible investing, SDGS Tracking strives to deliver investment results that not only track the SDGs but also contribute positively to global sustainability efforts. Through its dedication to accurately following the index's movements and adhering to sustainable investment principles, SDGS Tracking offers investors a vehicle to participate in the pursuit of both financial returns and societal advancement.
SDGS Correlation is designed to analyze and capitalize on the interrelationships between the performance of companies aligned with the United Nations Sustainable Development Goals (SDGs) and broader market trends. Through rigorous correlation analysis, the fund seeks to identify companies whose financial performance is closely tied to the achievement of sustainable development objectives. By investing in these companies, SDGS Correlation aims to provide investors with a portfolio that not only aligns with their values but also offers potential diversification benefits. The fund employs advanced statistical techniques to understand the correlation between SDG-focused investments and traditional market indices, aiming to construct a portfolio that may exhibit lower correlation with broader market movements. Through this approach, SDGS Correlation strives to offer investors the potential for risk mitigation while supporting sustainable development initiatives on a global scale.
SDGS Sector focuses on investing in companies within specific industries or sectors that are particularly crucial for addressing the United Nations Sustainable Development Goals (SDGs). By targeting sectors such as renewable energy, healthcare, education, and sustainable agriculture, the fund aims to allocate capital towards businesses that actively contribute to solving social and environmental challenges. SDGS Sector conducts in-depth sector analysis to identify companies with strong growth potential, robust environmental, social, and governance (ESG) practices, and a clear commitment to advancing sustainable development. Through strategic sector allocation and active management, SDGS Sector seeks to generate attractive financial returns for investors while promoting positive societal impact and environmental sustainability within key sectors essential for achieving the SDGs.
SDGS Exposure is a specialized investment vehicle that provides investors with targeted exposure to companies at the forefront of addressing the United Nations Sustainable Development Goals (SDGs). Leveraging comprehensive research and analysis, the fund identifies companies with a strong commitment to sustainability across various sectors and regions. By investing in these companies, SDGS Exposure offers investors the opportunity to align their portfolios with their values and support businesses driving positive social and environmental change. Through its focused approach, the fund aims to deliver not only competitive financial returns but also measurable impact in advancing the SDGs. With a diversified portfolio of companies making meaningful contributions to sustainable development, SDGS Exposure provides investors with a unique opportunity to participate in the transition towards a more sustainable future while potentially capturing growth opportunities in this rapid
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