The SPDR MSCI ACWI Low Carbon Target ETF (LOWC) is heading for some big changes, and those alterations could arrive as soon as Friday, April 22.
As was previously announced, State Street Global Advisors (SSGA) is reconfiguring LOWC into the SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC). LOWC, which debuted in November 2014, currently tracks the MSCI ACWI Low Carbon Target Index. The exchange traded fund’s new index will be the MSCI ACWI Climate Paris Aligned Index.
That index is “designed to support investors who seek to reduce their exposure to transition and physical climate-related risks and who wish to pursue opportunities arising from the transition to a lower-carbon economy in alignment with the Paris Agreement requirements,” according to State Street.
The low carbon-focused ETF is also moving to Nasdaq from the New York Stock Exchange (NYSE) and undergoing a share split.
“The fund will also be undergoing a 4:1 share split. Once implemented, the split will lower the fund’s share price and increase the number of outstanding shares. The aggregate market value of shares outstanding will not be impacted. The share split will apply to shareholders of record as of market close on or about April 19, 2022 and will be payable after market close on or about April 21, 2022. The shares will trade at their post-split price effective on or about April 22, 2022,” adds State Street.
Altering LOWC into NZAC doesn’t appear to be the result of a lack of success. In its current form, the ETF has north of $110 million in assets under management, and with low carbon investing still in its early innings, more assets could be on the way.
Rather, the change is likely more about benchmarking to the MSCI ACWI Climate Paris Aligned Index.
“The MSCI ACWI Climate Paris Aligned Index is based on the MSCI ACWI Index, its parent index, and includes large and midcap securities across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. The index is designed to support investors seeking to reduce their exposure to transition and physical climate risks and who wish to pursue opportunities arising from the transition to a lower-carbon economy while aligning with the Paris Agreement requirements,” according to MSCI.
As of the end of the first quarter, the index is home to 949 stocks, more than 59% of which are U.S.-based companies. Canada and Japan combine for over 10% of the index’s geographic exposure.
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