ESG funds: Lyxor Europe Socially Responsible theme ETF

In this article, we will introduce you to ESG funds in general, and to the Lyxor Europe Socially Responsible Theme ETF.

Exchange-traded funds (ETF) allow you to invest in baskets of stocks selected according to specific features, so you can always find one that fits your goals and interests. (If the concept of ETFs are still new to you, head over to our ETF knowledge centre for an introduction to ETFs)

In this article, we will introduce you to ESG funds: exchange-traded funds that only invest in companies generally complying with high Environmental, Social, and Governance (ESG) standards. 

In simple terms, ESG funds only invest in the most sustainable enterprises. To select them, they rely on the ESG rating of companies, a score that synthesizes their performance in sustainability in terms of environmental, social, and governance. You can find a more in-depth explanation of sustainable investments in this article.

Ratings such as ESG are issued by various independent providers, such as Corporate Knights Global 100, Bloomberg ESG Data Service, DowJones Sustainability Index, and MSCI ESG Research. Each of them have their own criteria to rate stocks, a revision of which goes beyond our scope here. The ESG funds that you’ll find on BUX Zero all replicate MSCI benchmarks, so the companies they invest in are selected according to the MSCI standards

This month, we would like to highlight three specific ESG ETFs that you can invest in using BUX Zero. To kick things off, with the Lyxor Europe Socially Responsible Theme ETF:  

Lyxor Europe Socially Responsible theme ETF

ISIN: LU1940199711

This fund tracks the MSCI Europe ESG Leaders Index, which is made up of around 200 European companies from 15 developed countries across 11 sectors, all showing high environmental, social and governance performance relative to their competitors. It is managed by Lyxor International Asset Management, an investment management company held by the French banking group Société Générale. 

The heaviest constituents include Dutch semiconductor company ASML (5.25% of the index), Swiss pharmaceutical giant Roche (4.34%), British consumer goods multinational Unilever (2.91%) and German software corporation SAP (2.78%). Please note that all the percentages change over time with the market cap of companies in the index. 

Fees you should know about

Listed in February 2019, the Europe Socially Responsible theme ETF is a large fund with around € 847 million under management. It fully replicates its benchmark index by owning all the securities in it and reinvests dividends instead of distributing them. 

Its total expense ratio (the sum of expenses charged by the fund manager) is 0.20% a year. On top of these fees charged by the fund manager, many brokers charge a commission. BUX Zero instead allows you to trade without a brokerage commission. Here’s how we do it.

Check your risk profile

Listed in February 2019, the Europe Socially Responsible theme ETF is a large fund with around € 847 million under management. It fully replicates its benchmark index by owning all the securities in it and reinvests dividends instead of distributing them. 

Before you invest you should always check if an investment product is the right fit for your personal risk profile, meaning how much risk you are willing to take. The Lyxor Europe Socially Responsible theme ETF has a risk profile of 6 on a scale from 1 to 7. This means expected rewards are high, but so are the risks. Take a look at the KIID document for further details. 

If you wish to start investing in this ETF right away, you can find it here in the app. Are you interested in some of the other ESG funds on BUX Zero? Check out the UBS USA Socially Responsible theme ETF and the Lyxor All-World Socially Responsible theme ETF

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All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

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