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Introducing the HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF

Learn more about the Clean Energy ETF 

Part 1: Introduction to the Clean Energy ETF | ZERO

Part 2: Investors Guide to Clean Energy | Sources of Clean Energy

Part 3: Investment Case for Clean Energy

Part 4: Introducing the HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF

 

HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF

ZERO is an UCITS compliant ETF domiciled in Ireland. The fund tracks the S&P Global Clean Energy Select Index.

The fund provides a unique exposure to the clean energy sector set to benefit from the ongoing fight against climate change. By partnering with South Pole, the fund provides credible carbon offsets to balance out the carbon cost of the portfolio as determined by Trucost.

The Clean Energy ETF will list on London Stock Exchange, Borsa Italiana and XETRA.

 

Capital Growth Objective

The strategy provides concentrated exposure to businesses in the global clean energy sector, as defined by the S&P Global Clean Energy Select Index. With firm global consensus to fight climate change, the energy sector will be at the centre of policy to catalyse transition to sources that are less carbon-intensive.

 

True net zero carbon footprint from offset program

HANetf will be the first to offer true net zero energy exposure, using South Pole as a credible partner to offset the index carbon footprint as defined by Trucost.

 

Well-defined carbon footprint

The manager uses Trucost, an S&P company, to generate a robust value of carbon emissions per $1million invested.

 

Credible partner in identifying legitimate carbon offset projects

There are a number of nascent companies emerging to help businesses and individuals quantify and offset carbon emissions. Han has partnered with South Pole, which has been in this business since 2006.

 

Robust carbon credit project selection criteria

This is an emerging industry, based substantially in developing countries where anti-corruption controls are not as well-established. Experience and established project selection frameworks (Real, Additional, Measurable, Verifiable, Permanent, Unique) incorporating third party verification are critical to avoid reputational damage and deliver the stated solution to investors with confidence.

 

No need for DIY carbon offset

As above, HANetf uses Trucost to measure and South Pole to offset in a world where data availability is limited and offsets programs require sophisticated diligence.

 

Low cost offsetting

At current pricing and an assumed 54.5 tonnes per $1million invested p.a., we estimate an offset cost of $457.80 per $1 million or <5 bps that will be wrapped within the management fee.

 

ESG-experienced investment manager

Purpose Investments, in partnership with Sustainalytics, has implemented ESG as a material factor in investment processes across its entire product suite. The firm has expertise in identifying and analysing relevant issues in evaluating investments across industries.

 

5 Year Indices Performance Comparison (Net Total Return)

Performance before inception is based on back tested index data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg/S&P. Data as of 01/06/2021

 

Sub-themes

By design, the fund references and index that is relatively concentrated across a limited set of sub themes, including renewables businesses and utilities.

Sub-Theme

Description

Examples

Renewables

Businesses principally engaged in electricity generation from non-finite sources such as solar and wind.

Vestas Wind Systems A/S, Plug Power, Brookfield Renewable Partners, First Solar

Utilities

Utilities which supply electricity principally generated from renewable sources.

Verbund AG, EDP Renovaveis SA, Orsted A/S

Carbon Offsets

Carbon credits that are used by the manager to offset emissions attributable to the fund’s investments in underlying portfolio companies.

 

 

Methodology

S&P Global Clean Energy Select Index

Stocks that meet the eligibility criteria are reviewed for specific practices related to clean energy in their business description. Index constituents are drawn from S&P Global BMI. The universe of companies that may be considered eligible for potential index inclusion is determined by S&P Dow Jones Indices based on factors such as a company’s business description and its most recent reported revenue by segment. Companies are identified as being in the clean energy business for their involvement in the production of Clean Energy or provision of Clean Energy Technology & Equipment, including but not limited to:

  • Biofuel & Biomass Energy Production
  • Biofuel & Biomass Technology & Equipment
  • Ethanol & Fuel Alcohol Production
  • Fuel Cells Technology & Equipment
  • Geothermal Energy Production
  • Hydro Electricity Production
  • Hydro-Electric Turbines & Other Equipment
  • Photo Voltaic Cells & Equipment
  • Solar Energy Production
  • Wind Energy Production
  • Wind Turbines & Other Wind Energy Equipment

 

After determining the eligible universe, the index components are selected as follows:

  1. The 30 largest stocks, as ranked by FMC, with exposure scores of 1 are selected and form the index.
  2. If there are fewer than 30 stocks with an exposure score of 1, the largest stocks from the eligible universe with an exposure score of 0.75 are selected until the target constituent count of 30 is reached.
  3. If after Step 3 there are still not 30 constituents, the highest-ranking stock with an exposure score of 0.5 is selected until the target constituent count of 30 is reached.
  4. All selected companies are then subjected to the same carbon-to-revenue footprint constraint applied to the S&P Global Clean Energy Index which is:

    For all companies selected in the prior steps, those with an S&P Trucost Limited (Trucost) carbon-to-revenue footprint standard score greater than three are excluded from index inclusion. Companies without Trucost coverage are eligible for index inclusion. If there are 30 stocks selected in the previous step, those excluded stocks with a carbon-to-revenue footprint standard score greater than three are replaced with the next highest ranked stocks in order to reach the index’s target constituent count of 30. Replacement stocks must have a carbon-to-revenue footprint lower than those being replaced to qualify for index addition. If, after this step, the index’s weighted average exposure score falls below 0.85, the lowest ranking stock with an exposure score of 0.5 is removed until the index’s weighted average exposure score reaches 0.85. Therefore, it is possible for the final index constituent count to be below 30.

 

Carbon-to-Revenue Footprint

The carbon-to-revenue footprint data used in the methodology is calculated by Trucost, and is defined as the company’s annual GHG emissions (direct and first tier indirect), expressed as metric tons of carbon dioxide equivalent (tCO2e) emissions, divided by annual revenues for the corresponding year, expressed in millions of US dollars. Trucost’s annual research process evaluates the environmental performance of a given company with one output of this process being its annual greenhouse gas emissions profile.

 

Constituent Weightings

At each rebalancing, constituents are weighted based on the product of each constituent’s FMC and exposure score, subject to a single constituent weight cap of 4.5

For full methodology, please visit https://www.spglobal.com/spdji/en/indices/esg/sp-global-clean-energy-select-index/#data

 

Learn more about our Clean Energy ETF put visiting the fund page here 

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