iShares ESG MSCI EM Leaders ETF (LDEM) yesterday received more than $600 million in investment from Ilmarinen, Finland’s largest pension insurance company. This marks the second time Ilmarinen has reallocated assets toward iShares ESG-integrated strategies from traditional benchmarks.
Established in 1961, Ilmarinen has made sustainability an integral aspect of its overall company philosophy and investment strategy for decades. The firm is responsible for providing pension insurance for 1.2 million people and has about EUR 50 billion in ESG-integrated investment assets.
“ESG has been a core component of our investment strategy for a long time. Until recently, however, implementing sustainable strategies in our indexed public equity portfolio has been difficult because many parts of the market lacked a suitable ESG-oriented benchmark,” said Anna Hyrske, head of responsible investing at Ilmarinen. “Advances in ESG data and analysis, indexing and portfolio construction have helped us achieve our sustainability goals and meet our performance objectives.”
LDEM seeks to track an index composed of more than 400 emerging market large- and mid-capitalization high ESG performing companies relative to their sector peers1 in 26 countries.
Excluded from the index are companies involved in tobacco, alcohol, gambling, nuclear power, nuclear and conventional weapons, and controversial weapons as well as other controversial business involvement.2
Choice and Conviction Drive ESG Growth
“Ilmarinen is pioneering an approach to re-orienting its entire portfolio toward more sustainable solutions,” said Salim Ramji, Global Head of iShares and Index Investing at BlackRock. “More and more clients globally have conviction about the impact of sustainability risks on their portfolios and are integrating ESG into their investment allocation decisions as a result.”
iShares previously worked with Ilmarinen to launch its iShares ESG MSCI USA Leaders ETF (SUSL), which launched in May 2019 with nearly $850 million from the Finnish firm. SUSL is the largest equity ETF launch in the past 15 years, and has subsequently attracted another $1 billion in investor flows, more than doubling the fund to $1.9 billion in assets3. Across SUSL and LDEM, the Sector Leaders ESG ETF range has $2.5 billion in assets.
“Assessing a portfolio’s environmental, social and governance characteristics through a risk lens is becoming standard for many investors,” said Carolyn Weinberg, Managing Director and Global Head of Product for iShares. “With over $26B in assets invested in more than 80 ETFs globally, iShares is continually innovating to expand our range of ESG index strategies to help meet our clients’ investment objectives, from implementing screens to targeting high ESG-rated companies.”
Today’s announcement is the latest example of BlackRock continually delivering on its commitment to clients to make sustainability its standard for investing and provide clients with a growing number of options to invest sustainably.
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iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 900+ exchange traded funds (ETFs) and $2.24 trillion in assets under management as of December 31, 2019, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firm4.
1 As determined by MSCI, the index provider.
2 Exclusion screens based on revenue or percentage of revenue thresholds for certain categories and categorical exclusions for others.
3 AUM as of January 28, 2020.
4 Based on $7.43 trillion in AUM as of 12/31/19.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
A fund's environmental, social and governance (“ESG”) investment strategy limits the types and number of investment opportunities available to the fund and, as a result, the fund may underperform other funds that do not have an ESG focus. A fund's ESG investment strategy may result in the fund investing in securities or industry sectors that underperform the market as a whole or underperform other funds screened for ESG standards.
International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/ developing markets or in concentrations of single countries.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). BlackRock is not affiliated with Ilmarinen Mutual Pension Insurance Company.
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