New SPDR ETF addresses carbon emissions, fossil fuel reserves

By Toni Weeks

San Luis Obispo, Calif., Nov. 24 – SPDR Index Shares Funds announced the details on its new SPDR MSCI ACWI Low Carbon Target exchange-traded fund, according to an N-1A filing with the Securities and Exchange Commission.

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the MSCI ACWI Low Carbon Target index, which tracks the securities of publicly traded companies in developed and emerging markets while seeking to minimize carbon exposure.

The index is designed to address two dimensions of carbon exposure: carbon emissions and fossil fuel reserves, expressed as potential emissions. By overweighting companies with low carbon emissions relative to sales and per dollar of market capitalization, the index aims to reflect a lower carbon exposure than that of the broad market.

The index is a subset of the MSCI ACWI index. Securities in the parent index are assigned a “carbon exposure” measured in terms of greenhouse gas emissions, relative to sales and potential carbon emissions from fossil fuels, per dollar of market capitalization. They are then selected to minimize carbon exposure, subject to a tracking error constraint of 30 basis points relative to the parent index, along with other criteria.

Mike Feehily, John Tucker and Karl Schneider are the portfolio managers.

The fund trades on the NYSE Arca under the symbol “LOWC.”

There are no shareholder fees. Total annual fund operating expenses consist solely of a 0.3% management fee.

Boston-based SSga Funds Management, Inc. is the investment adviser.

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