State Street Climate ETF Gets Makeover

April 18, 2022

Later this month, a climate-focused ETF offered by State Street Global Advisors will undergo a bit of a transformation.  

On April 22, the $110 million SPDR MSCI ACWI Low Carbon Target ETF (LOWC) will become the SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC) and change its index from the MSCI ACWI Low Carbon Target Index to the MSCI ACWI Climate Paris Aligned Index. 

LOWC launched in late 2014 alongside the $1.2 billion iShares MSCI ACWI Low Carbon Target ETF (CRBN). Both funds were seeded by the United Nations Joint Staff Pension Fund and track the same index.  

With LOWC at one-tenth the size of CRBN despite both funds costing the same 20 basis points in expense ratios, it seems State Street decided to shift the fund’s objective slightly to differentiate it from its iShares twin. LOWC (and CRBN) currently takes a global approach to investing, tilting its portfolio toward companies that have smaller-than-average carbon footprints.  

The fund’s new index will combine general ESG criteria with the standards put forward in the Paris Agreement to halt climate change. Earlier this year, iShares launched the now-$620 million iShares Paris-Aligned Climate MSCI USA ETF (PABU), which focuses solely on the U.S. but has a similar methodology.  

 

Contact Heather Bell at [email protected] 

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