V-Square Debuts Carbon Transition ETF

Today, V-Square Quantitative Management launched its second fund, which seeks to support the transition to a low-carbon economy and benefit from the opportunities presented by that transition. The V-Shares MSCI World ESG Materiality and Carbon Transition ETF (VMAT) tracks an index provided by MSCI.  

The new fund comes with an expense ratio of 0.39% and lists on Cboe Global Markets. 

VMAT’s underlying benchmark screens the MSCI World Index to exclude companies with significant involvement—meaning a category represents more than 5% of revenue—in controversial weapons, tobacco, thermal coal mining and thermal coal power. Asset stranding and violations of the United Nations Global Compact Principles are also reasons for removal.  

Once the eligible company pool is established, the companies are ranked within their respective sectors based on in-house sustainability scores that take into account industry-relevant criteria around environmental, social and governance issues. Companies are then selected based on their scores within their sectors until the chosen companies represent at least 40% of the market capitalization of the original sectors, the document says.  

From there, constituent companies are weighted using a combination of market cap and a score that covers how likely a company is to be affected either negatively or positively by the transition to a low-carbon economy. The prospectus notes that the underlying index had 570 components at the end of April.  

V-Square launched the V-Shares US Leadership Diversity ETF (VDNI) at the end of last year. It currently has just over $1 million in assets under management. The fund invests in companies that have diverse representation on their boards and among their directors.  

Contact Heather Bell at [email protected]