BlackRock Low Carbon ETFs' Massive Debut

BlackRock Low Carbon ETFs' Massive Debut

The two funds have nearly $2 billion in assets after one day of trading. 

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Yesterday, BlackRock rolled out two ETFs that hit with a massive splash. The BlackRock World ex U.S. Carbon Transition Readiness ETF (LCTD) and the BlackRock U.S. Carbon Transition Readiness ETF (LCTU) are both actively managed and look to invest in companies that are likely to benefit from the transition to a low-carbon economy.

As of this morning, LCTU has $1.25 billion after its first day of trading, while its ex-U.S. counterpart LCTD has $586 million in assets, apparently fueled by institutional investor interest. LCTU's assets intake on its first day is the biggest on record for an ETF.

LCTU comes with an expense ratio of 0.30%, while LCTD charges 0.35%. Both list on the NYSE Arca.

The funds select their components from major established indexes covering large and midcaps—the MSCI World ex USA Index in the case of LCTD and the Russell 1000 in the case of LCTU. Companies in those indexes are scored based on five “pillars” aimed at evaluating how well-equipped a company is to face the challenges of transitioning to a low-carbon economy: fossil fuels, clean technology, energy management, waste management and water management, the prospectus says.

From there, the funds’ managers use the scores to overweight or underweight the companies and incorporate governance criteria into their final determinations, according to the document.

Contact Heather Bell at [email protected]

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.