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Engaged Tracking (ET) Index Ltd (trading as 'Engaged Tracking') ©2019. Company registration number: 08876852.

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BESPOKE INVESTMENT STRATEGIES

ET TILTED PORTFOLIO AGAINST BENCHMARK (GLOBAL DEVELOPED LARGE)

RETURN

Low Carbon Indexes reduce exposure to carbon risk and have outperformed their benchmarks. 

Engaged Tracking creates Investment Strategies, which could include for example carbon momentum fund and avoided carbon emissions methodologies.

TIME 

ET LOW CARBON INDEX SERIES
 

The Engaged Tracking Low Carbon Index Series is based on a public, transparent carbon ranking of each constituent company.

WHY RESPONSIBLE INVESTORS ARE USING LOW CARBON INDEXES

  • Engaged Tracking investors reduce their exposure to carbon risk while encouraging constituent companies to lower emissions in line with the goals of the Paris Climate Change Agreement.

  • Every ET Low Carbon Index in the series has outperformed its benchmark over the last six years and this trend is expected to continue. Early adopters will benefit most.

  • Fossil-free versions of each index are available.

  • Includes Scope 1, 2 and 3 greenhouse gas emissions.

  • Includes active engagement with constituent companies.

  • Equity and bond index strategies available.

  • Low active return correlation with other indexes.

  • Bespoke strategies available, including sector-neutral weightings.

             

FACTSHEETS

ET Low Carbon Transition Index - Global Developed Markets Large Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

ET Low Carbon Transition Index - Europe Developed Markets Large Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

ET Low Carbon Transition Index - North America Developed Markets Large Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

ET Low Carbon Transition Index - Global Developed Markets Large+Mid Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

ET Low Carbon Transition Index - Europe Developed Markets Large+Mid Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

ET Low Carbon Transition Index - North America Developed Markets Large+Mid Cap - Carbon Ranking Metric: Scope 1+2+3 Emissions Intensity

FAQs

What is the historical performance versus traditional market capitalisation based indexes?

  •  Each index in the ET Low Carbon Index Series has outperformed the market for the last six years.

To what extent is the oil price driving returns?

  • ET Low Carbon Indexes have lower correlations to the oil price than other equity indexes, e.g. MSCI ACWI Index.

    • ET Low Carbon Indexes have a weak positive correlation, in the range 11-13% to changes in the oil price.

    • ET Fossil Free Low Carbon Indexes have a lower correlation than the ET Low Carbon series, in the range 10-11% to changes in the oil price.
       

  • Over the same period, global equities as measured by MSCI ACWI have a correlation of 14.6% and is in line with the ET Global 2400 base index at 14.9%.

 

  • Is this relationship stable over different oil price regimes?

    • Interestingly, when the oil price is above USD100, the correlation of the ET Low Carbon and Fossil Free series fall to 5-7%, suggesting no correlation.

    • When the oil price is below USD60, the correlation of the ET Low Carbon and Fossil Free series remains stable

    • However, when the weekly oil price changes by more than 5%, in either direction, the ET Low Carbon and Fossil Free Low Carbon Index series correlation jumps to 25-27%, similarly global equities rise to 35%.

Why are ET Low Carbon Indexes outperforming the market?

  • ET Low Carbon Indexes advantage companies with lower emissions and better disclosure. Companies disclosing their carbon risk exposure are likely to be better-managing current and emerging risks than those that are failing to take account of climate risk. Companies with better carbon disclosure have also been found to enjoy a lower cost of capital, lower disagreement between investment analysts and lower volatility.