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Fidelity's Sustainable Paris-Aligned ESG ETFs are a great way to invest in a greener future. These ETFs are designed to meet the rigorous standards of the Paris Agreement, which aims to limit global warming to well below 2°C.
By investing in these ETFs, you're supporting companies that prioritize the environment, social responsibility, and governance (ESG) factors. This approach helps to reduce the financial risks associated with environmental degradation and social issues.
The Paris Agreement sets a goal to limit global warming to well below 2°C and pursue efforts to limit it to 1.5°C. Fidelity's Sustainable Paris-Aligned ESG ETFs are aligned with this goal, making them a great choice for those who want to invest in a sustainable future.
Why Invest in ESG ETFs
Investing in ESG ETFs can be a great way to gain exposure to a Paris-aligned U.S. portfolio, designed to be compatible with the objectives of the Paris Agreement.
By investing in ESG ETFs, you can seek to reduce exposure to transition and physical climate risks while pursuing opportunities arising from the transition to a low-carbon economy.
You can use ESG ETFs as a building block to build a sustainable equity portfolio for the long-term, providing a solid foundation for your investment strategy.
Investing in ESG ETFs allows you to align your investments with your values and contribute to a more sustainable future, while also potentially generating long-term returns.
Understanding ESG ETFs
ESG ETFs, like Fidelity's Paris-aligned options, offer a way to invest in a sustainable future. By focusing on Environmental, Social, and Governance (ESG) factors, these ETFs aim to reduce exposure to transition and physical climate risks.
One key benefit of ESG ETFs is exposure to a Paris-aligned U.S. portfolio, designed to be compatible with the objectives of the Paris Agreement. This means you can invest in a portfolio of large- and mid-capitalization U.S. companies that are working towards a low-carbon economy.
Building a sustainable core is a long-term goal that can be achieved with ESG ETFs. They can be used as a building block to construct a sustainable equity portfolio for the long-term.
Why Pabu?
If you're looking to invest in a more sustainable future, PABU is a great option. It offers exposure to a Paris-aligned U.S. portfolio, designed to be compatible with the objectives of the Paris Agreement.
By investing in PABU, you'll be able to access the low-carbon transition investment opportunity, which seeks to reduce exposure to transition and physical climate risks. This is a smart move, considering the growing importance of environmental, social, and governance (ESG) factors in investing.
PABU can be a valuable building block for a sustainable equity portfolio, allowing you to build a sustainable core for the long-term.
Business Involvement
Business Involvement metrics can help investors gain a more comprehensive view of specific activities in which a fund may be exposed through its investments.
Business Involvement metrics are not indicative of a fund's investment objective, and they don't change a fund's investment objective or constrain the fund's investable universe.
BlackRock uses data from MSCI ESG Research to calculate Business Involvement metrics, which provides a profile of each company's specific business involvement.
This data is then summed up across holdings and translated to a fund's market value exposure to the listed Business Involvement areas.
Business Involvement metrics only identify companies where MSCI has conducted research and identified as having involvement in the covered activity.
It's possible there is additional involvement in these covered activities where MSCI does not have coverage.
Business Involvement metrics are only displayed if at least 1% of the fund's gross weight includes securities covered by MSCI ESG Research.
Screens
ESG ETFs often use business involvement screens to exclude certain companies from their portfolios. These screens can be based on revenue thresholds or categorical exclusions.
One common screen is for civilian firearms, which means companies that derive a significant portion of their revenue from this industry may be excluded.
Controversial weapons, nuclear weapons, and tobacco are also often screened out.
Oil and gas, oil sands, power generation, and thermal coal mining are other categories that may be excluded based on revenue thresholds.
Reading the full definition for each screen is essential to understand the specific criteria.
Research and Tools
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The Fidelity Sustainable Paris-Aligned ESG ETFs are designed to track the performance of the MSCI Paris-Aligned Climate Index, which has been in existence since 2020.
This index uses a set of climate transition metrics to evaluate companies' exposure to climate-related risks and opportunities.
Fidelity offers several Paris-Aligned ESG ETFs that cater to different investor needs and risk profiles.
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Fees
Fees are an important consideration when evaluating a fund's performance. The management fee is 0.10%.
The fund also incurs acquired fund fees and expenses, but these are surprisingly low at 0.00%. Other expenses are also minimal, coming in at 0.00%.
The overall expense ratio is 0.10%, which is a key metric to keep in mind when assessing the fund's efficiency.
Here's a breakdown of the fees:
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ESG & Responsible Investing is a rapidly growing field, with the European active ETF market experiencing strong growth, boasting a 50% increase in assets under management year to date.
Assets under management for the European active ETF market have reached almost USD50 billion in the region.
Fidelity International is expanding its sustainable active ETF range with the launch of two fixed income ETFs, the Fidelity UCITS II ICAV – Fidelity Sustainable EUR High Yield Bond Paris-Aligned Multifactor UCITS ETF and the Fidelity UCITS II ICAV – Fidelity Sustainable USD High Yield Paris-Aligned Multifactor UCITS ETF.
![Paris Cityscape with Eifel Tower and River](https://images.pexels.com/photos/5466894/pexels-photo-5466894.jpeg?auto=compress&cs=tinysrgb&w=1920)
These funds are part of Fidelity's successful sustainable ETFs, which have grown to over USD5.7 billion assets under management across 13 different active strategies since their launch in 2021.
The Fidelity UCITS II ICAV – Fidelity Sustainable EUR High Yield Bond Paris-Aligned Multifactor UCITS ETF and Fidelity UCITS II ICAV – Fidelity Sustainable USD High Yield Paris-Aligned Multifactor UCITS ETF have listed on Xetra, with listings on the London Stock Exchange, SIX and Borsa Italiana to follow.
The funds are classified as Article 9 under the Sustainable Finance Disclosure Regulation and aim to align with the Paris Agreement long-term global warming objectives by restricting carbon emission exposure in their respective portfolios.
The funds are built and rebalanced using Fidelity’s proprietary multifactor model, based on the firm’s heritage of fixed income quantitative research and datasets.
Here are some key facts about the funds:
- The funds invest in a portfolio primarily made up of high-yielding, sub-investment grade corporate debt securities of issuers globally.
- The funds seek income and capital growth while aiming to align with the Paris Agreement long-term global warming objectives.
- The funds are classified as Article 9 under the Sustainable Finance Disclosure Regulation.
Sources
- https://www.test.de/Fonds-im-Test-Fuenf-Punkte-fuer-die-Besten-4331006-0/
- https://www.esgtoday.com/fidelity-launches-new-article-9-paris-aligned-corporate-bond-etfs/
- https://fintech.global/2023/11/02/fidelity-unveils-climate-focused-fixed-income-etfs-in-line-with-paris-agreement/
- https://etfexpress.com/2024/10/23/fidelity-international-expands-sustainable-active-etf-range-2/
- https://www.blackrock.com/us/individual/products/325725/ishares-paris-aligned-climate-msci-usa-etf
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