LGIM launches Energy Transition Commodities ETF

As LGIM expands its ETF range to reflect the demand for investments in the energy transition

ETF Exchange Traded Fund abbreviation, glowing text, inscription, banner. ETF business concept. 3D render


Holly Downes

Legal & General Investment Management (LGIM) has expanded its ETF range with the launch of the L&G Energy Transition Commodities UCITS ETF.

It aims to provide exposure to the three pillars of the energy transition through commodity futures. It offers investors liquid and diversified exposure to a combination of commodities central to the energy transition, providing access to these three commodity groups.

The first is transition metals that are needed to produce, store and distribute clean energy. Second is lower-carbon transition energy sources such as natural gas and ethanol. This helps overcome peak energy demand and the challenge of ‘hard to abate’ sectors. Last is carbon pricing which increases the cost of polluting activities, incentivising the switch to low-and-no-carbon activities.

Further, the fund offers diversification and hedging opportunities with over 50% of the components not typically found in traditional commodity portfolios. It also provides access to 18 liquid commodities, including an allocation to carbon markets.

It builds on LGIM’s broader range of commodities ETFs – including the L&G All Commodities UCITS ETF, the L&G Longer Dated All Commodities UCITS ETF and the L&G Enhanced Commodities UCITS ETF. The expansion of the range reflects the demand for investment solutions that tap into the growth potential of the energy transition.

Aanand Venkatramanan, head of ETFs, EMEA at LGIM said: “We are excited to bring this innovative commodities ETF to market, providing a unique proposition which enables investors to seek to benefit from the significant growth potential of the energy transition, whilst also providing inflation risk mitigation and uncorrelated exposure.

“Like the industrial revolution, the energy transition is a commodity story, but with a new cast of characters. Compared with today’s energy mix, we believe the energy transition is built on new inputs, which in our view are underrepresented in current commodity portfolios. This is why we built the ETF around transition metals, transition energy and carbon pricing; capturing the next phase of demand, and opportunity, in the story.”

The fund will be available to both wholesale and institutional investors, registered in the UK, France, Germany, Italy, Netherlands, Norway, Denmark, Sweden, Finland, Austria, Luxembourg, Switzerland and Spain, as well institutional investors in Singapore. It has been categorised as Article 6 under the Sustainable Finance Disclosure Regulation (SFDR) and will be managed by LGIM’s expert ETF team.

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