Franklin Templeton has launched two exchange-traded funds (ETFs) tracking sustainable versions of the S&P 500 and S&P World indices.
They will track the S&P 500 Guarded and S&P World Guarded, which re-weight their original indices based on ESG scores and exclude controversial companies (such as those involved in coal, tobacco and controversial weapons).
In doing so, the S&P 500 Guarded has 95 fewer constituents than the prime index, with 408 names in total.
Yet these screens did not come at the expense of performance – the S&P 500 Guarded index narrowly beat the original S&P 500 by 5.1 percentage points over the past five years with a total return of 105.6%.
Rafaelle Lennox, head of ETF product strategy, said: “These indices achieve two objectives which include an enhanced ESG and lower carbon emission profile while maintaining minimal performance deviation from the parent indices, S&P 500 and S&P World respectively. This is unique in the market and supports our clients’ evolving needs.”
Head of ETF distribution Caroline Baron said the Franklin S&P 500 Screened and the Franklin S&P World Screened ETFs are “suitable for investors looking to invest in core exposures that are Article 8 compliant and those seeking a tight tracking versus the traditional benchmarks”.
This article originally appeared in our sister publication, Portfolio Adviser
