iShares Debuts Water ETF With ESG Criteria

iShares rolled out an exchange-traded fund on Thursday that focuses on water sustainability. The iShares MSCI Water Management Multisector ETF (IWTR) tracks the MSCI ACWI IMI Sustainable Water Transition Extended Capped Index, which has a dual focus on water supply activities and water usage.  

IWTR comes with an expense ratio of 0.47% and lists on the Nasdaq stock exchange.  

The new fund’s underlying index is global in scope. Part of the portfolio targets companies that provide water-related products and services, with at least 10% of their revenues coming from sustainable water activities; the other part of the portfolio focuses on companies that have demonstrated efficient water management, according to the prospectus.  

In addition to its focus on water sustainability, the fund has screens to limit or eliminate exposure to companies involved in business activities related to the tobacco, weapons, thermal coal or oil sands industries. It also can screen out companies involved in a variety of types of controversies in the environmental, social and governance space or those that have poor ratings in terms of ESG or water stress management, the document says. 

A fact sheet provided by iShares notes that 41% of the world is in areas facing high or very high levels of water shortage. It also offers examples of the two different types of holdings in the portfolio of 48 securities.  

While Xylem Inc., the largest equity holding in the fund at 7.29% of the portfolio, is one of the largest providers of water solutions and technology in the world, Taiwan Semiconductor Manufacturing Company, weighted at 6.05% in the portfolio, is included because of how it reduced its consumption by 9% since 2010.  

The largest global water ETF, the $919 million Invesco S&P Global Water Index ETF (CGW), has no specific ESG criteria but does have a similar number of components. It comes with an expense ratio of 0.57%.  

Contact Heather Bell at [email protected]