On Wednesday, Invesco debuted the Invesco MSCI Global Climate 500 ETF (KLMT), the latest addition to its growing fund lineup.
KLMT aims to give investors access to similar investment results as the MSCI AWI Select Climate 500 Index. The fund has a low net expense ratio of 0.10%.
The MSCI AWI Select Climate 500 Index is a subset of the MSCI AWI Index. This climate-focused index tracks roughly 500 global equity companies within the MSCI AWI Index that possess specific climate and environmental criteria. As of May 31, 2024, the fund prospectus notes that the market cap for index constituents ranged between roughly $5 billion to $3 trillion.
In scrutinizing assets for inclusion, the index aims to minimize exposure to physical and transition risks for climate change. This includes assets that are hitting benchmarks for yearly reductions in greenhouse gas emissions connected to revenue. Qualified securities must also reach an aggregate weight for approved carbon emission reduction targets.
Matching the Index
To track the underlying index, KLMT uses a full replication methodology. In doing so, the fund will invest in roughly all of the index’s constituents, in proportional weight to the index.
KLMT will only concentrate fund investments to the same extent that the MSCI AWI Select Climate 500 Index does. As of May 31, 2024, the index has particularly strong exposure to the information technology sector. However, the fund prospectus adds that KLMT’s investments and overall concentrations will likely change over time.
“Invesco has been at the forefront of ETF innovation. It’s great to see them expand their strong suite of clean energy ETFs with a new climate-focused offering that allows investors to capitalize on the ongoing energy transition,” added Kirsten Chang, VettaFi senior industry analyst.
With the launch of KLMT, Invesco has over 220 ETFs listed in the United States. As a whole, these funds represent more than $500 billion in assets under management.
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