Rounding out its new line of socially responsible investment strategies, BlackRock’s iShares launched an Economic, Social and Governance, or ESG, exchange traded fund focused on U.S. companies.
BlackRock’s iShares united has come out with the iShares MSCI USA ESG Optimized ETF (NasdaqGM: ESGU). ESGU has a 0.28% expense ratio.
The new ETF tries to reflect the performance of the MSCI USA ESG Focus Index, which is an optimized equity index designed to reflect the performance of U.S. stocks taken from the MSCI USA Index that have positive environmental, social and governance characteristics.
As opposed to its parent index, the ESG Focus Index excludes securities of companies involved in the business of tobacco and controversial weapons companies, along with securities of companies involved in very severe business controversies, according to the prospectus sheet.
The customized index will also follow a quantitative selection process to exclude companies with unexpected costs in the mid- to long-term. The underlying index can calculate each company’s exposure based on business segment and geographic risk and analyzes the extent to which companies have developed strategies and programs to manage ESG risks and opportunities.