Invesco Launches the Invesco MSCI Global Climate 500 ETF (KLMT)
Invesco has launched the Invesco MSCI Global Climate 500 ETF (KLMT) on the New York Stock Exchange, backed by a $1.6 billion investment from Finnish pension insurer Varma. The ETF aims to track the MSCI ACWI Select Climate 500 Index, focusing on companies with a strong record of reducing greenhouse gases and carbon emissions. This initiative underscores the growing institutional interest in ETFs for their tax efficiency, liquidity, and cost-effectiveness. Brian Hartigan, Global Head of ETFs & Indexed Investments at Invesco, highlighted the firm's ability to deliver customized, cross-regional ETFs. Timo Sallinen from Varma emphasized that the investment aligns with their responsible investing principles and provides greater flexibility for their €61 billion assets.
- Invesco launched the KLMT ETF with $1.6 billion from Varma.
- KLMT tracks the MSCI ACWI Select Climate 500 Index, focusing on environmental criteria.
- The initiative demonstrates Invesco's ability to create tailored ETFs for institutional investors.
- Varma's $1.6 billion investment aligns with their responsible investing principles.
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Insights
The launch of the Invesco MSCI Global Climate 500 ETF presents a unique opportunity to examine the growing institutional interest in ETFs focused on sustainable investments. One of the compelling aspects of this ETF is the substantial initial investment of
This ETF is designed to track the MSCI ACWI Select Climate 500 Index, focusing on companies with strong environmental credentials. This index includes companies that have consistently reduced greenhouse gas and carbon emissions, reflecting a clear commitment to sustainability. This kind of focus is attracting institutional investors who are under pressure to include ESG considerations in their investment decisions.
For retail investors, it's important to note that institutional backing by a reputable entity like Varma can provide a certain level of confidence in the ETF's stability and long-term viability. However, one should also consider the ETF's performance metrics and the index it tracks. Since KLMT is passively managed, its success will closely mirror the performance of the selected index constituents. Investors looking to align their portfolios with sustainable goals might find KLMT an attractive option.
From a financial perspective, the introduction of the Invesco MSCI Global Climate 500 ETF (KLMT) with substantial backing by Varma signals confidence in the ETF's potential to deliver targeted returns in the sustainable investment sector. The ETF's primary advantage lies in its low-cost, passive management approach, which can be highly appealing for cost-conscious investors. ETFs are known for their tax efficiency and liquidity, offering flexibility for both institutional and retail investors.
One must consider the ETF's expense ratio and how it compares with similar products in the market.
Short-term investors should be mindful of market volatility and the specific sectors represented within the ETF, as these could impact performance. Long-term investors might benefit from the growing acceptance and performance of ESG-focused funds. It is also important to observe how the ETF performs relative to its benchmark and other competing funds in the same category.
New sustainable energy ETF lists with
"The launch of KLMT is clear indication that sophisticated institutions are increasing their usage of ETFs for a variety of functions. We are excited to collaborate with MSCI to address the needs of one such investor and provide Varma with a US ETF that offers the precise strategy needed for their portfolio," says Brian Hartigan, Global Head of ETFs & Indexed Investments. "Invesco is one of the few global asset managers capable of servicing clients who want customizable, cross-regional ETFs for exacting exposures."
Institutional interest in ETFs continues to grow as many large, experienced investors recognize that the unique attributes of an ETF - tax efficiency, liquidity and cost effectiveness - can fill a specific need in their portfolios. ETFs can often provide liquidity in more nuanced areas of the market that might require expertise to manage efficient exposure, such as, for example, senior loans. But not every "off-the-shelf" ETF can offer large, experienced investors the precise exposure needed. KLMT is a great example of Invesco's ability to work with global partners to create a lower-cost, passively managed ETF that meets the exact investment mandate set forth by Varma.
"We are very pleased to work alongside Invesco, one the world's biggest asset managers, and MSCI, a leading global index provider, to create an ETF tailored to Varma's systematic investment preferences," says Timo Sallinen, Varma's Head of Listed Securities. "Our
KLMT seeks to track the MSCI ACWI Select Climate 500 Index, which is an index comprised of securities of global companies that meet certain environmental and climate criteria relative to their peers, including a track record of reducing greenhouse gas and carbon emissions. The index is constructed by selecting the constituents from the market capitalization weighted MSCI ACWI ex Select Countries Index. MSCI and Varma worked together to design the index, to ensure it captures constituents with one or more greenhouse gas emissions reduction targets that fit into Varma's precise investment parameters with respect to energy transition.
"We are excited that Varma and Invesco have chosen the MSCI ACWI Select Climate 500 Index as the benchmark for the new Invesco MSCI Global Climate 500 ETF," said Christine Berg, Head of Client Coverage,
Varma's investment experience may not be representative of other customers' investment experience and is not a guarantee of future performance or success.
About Invesco Ltd.
Invesco Ltd. (Ticker NYSE: IVZ) is a global independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. With offices in more than 20 countries, our distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. Invesco managed US
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About Risk
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply.
The Fund's return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.
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The Fund is non-diversified and may experience greater volatility than a more diversified investment.
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Contact: Stephanie Diiorio, stephanie.diiorio@invesco.com, 212.278.9037
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SOURCE Invesco Ltd.
FAQ
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