Blog Posts — October 20, 2020

More Funds’ Levy: Israel’s First Low Carbon ETF Offers Exposure to Europe and Climate Champions

Qontigo has licensed the STOXX® Europe 600 Low Carbon Index to Israel’s More Mutual Funds Management to underlie an exchange-traded fund (ETF). The fund, the Middle East country’s first one tracking a low-carbon strategy, was launched today on the Tel Aviv Stock Exchange. 

The STOXX Europe 600 Low Carbon Index closely tracks the risk-return profile of its benchmark, the STOXX® Europe 600 Index, while offering a reduction in carbon emissions in the overall portfolio.

We caught up with Eli Levy, co-chief executive officer of More Investment House, to learn more about the objectives behind this launch.

This is the first low-carbon ETF in Israel. Why have you chosen a fund that invests in European stocks, and why now?
With a penetration of 20% of renewable energies and ambitious goals to make the continent neutral from carbon emissions by the middle of the century, Europe, in our opinion, is the world leader in the ‘green race’ and will meet its targets by 2050. The Green Deal has crowned the continent’s concerns about the transition to renewable energy, clean transportation, buildings with high energy efficiency, etc. In the near future we will see more companies from a wide range of sectors adapt and update business models so that they can receive funding from the program.”

How developed are sustainability strategies in your home market, and how do you see that changing? Are there any specific drivers for growth or change?
In order to succeed and implement an agenda of sustainability and environmental neutrality as widely as possible, and to base an investment strategy on these values, we believe that several factors are needed, such as a supportive regulator, adoption by a variety of sectors and increased awareness. Companies operating in areas such as renewable energy, those adopting different technologies for energy efficiency and improving water consumption, use of environmentally friendly raw materials, more and more companies reporting their environmental responsibility to the public, etc. Companies that do not receive ESG ratings are not included in many investors’ holdings. All this is helping create a positive ecosystem for the near future for strategic management of diverse investments in various areas of sustainability. As we see trends like these spread, we believe we will see growth and acceleration in sustainability.”

What type of investors do you have in mind with the launch of the MORE SAL (4D) STOXX Europe 600 Low Carbon ETF?
In recent years, the share of European markets among investors’ portfolios has declined, and alternative investment solutions have found their place in their capital allocation. An investment solution for European markets that implements sustainability and gives overweight to companies that adopt environmental neutrality allows us to offer the MORE SAL (4D) STOXX Europe 600 Low Carbon ETF to most types of investors, due to the implementation of investments with a nature of environmental responsibility, and in the process increase back exposure to European markets.”

How does the ETF fit in within the entire range of products you offer?
“More Investment House has grown in assets under management based on active investment products. As part of our vision, and working with different types of investors, we also promote passive investment products like ETFs and index funds alongside our active investment management. MORE SAL (4D) STOXX Europe 600 Low Carbon ETF integrates as a solution for exposure to European markets. It allows us from the very first stage to offer a product that meets two requirements: market exposure and exposure to companies that adopt a sustainability approach.”

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The STOXX Europe 600 Low Carbon Index utilizes both estimated and reported carbon intensity scores. It reduces carbon exposure by overweighting lower emitters and underweighting higher emitters. STOXX uses CDP and ISS ESG as data sources.