Legal & General Investment Management (LGIM), one of the world‘s largest asset managers with approximately £1.2 trillion of AuM globally, today announces the launch of its new L&G Energy Transition Commodities ETF. This is a product that offers exposure to three major macro-areas of the energy transition through commodity futures, in order to exploit the growth potential contained in the next chapter in the history of global energy.
The ETF, which is the first of its category to be launched, allows you to invest in a liquid and diversified basket of commodities linked to the energy transitionin turn divided into three groups which present favorable dynamics on the demand side:
Transition metal, i.e. those metals necessary to produce, conserve and distribute clean energy. Low-carbon transition energy sources, such as natural gas and ethanol, that help overcome peak demand and the challenge of sectors where emissions are more difficult to abate. Carbon pricing, i.e. those activities that aim to impose a cost on pollution, increasing the expenses for those who emit CO2 and, therefore, supporting the transition to sustainable business models.
The ETF offers investors diversification and hedging opportunities, as it is made up of more than 50% of components that are not usually found in a commodity portfolio; so much so that many of these were made available to UCITS investors for the first time thanks to this product. In particular, the ETF allows exposure to 18 commodities in a liquid and diversified way, including an allocation to the CO2 emissions market.
This new solution becomes part of one wider range of commodity ETFs launched by the company, which includes the L&G All Commodities UCITS ETF, the L&G Longer Dated All Commodities UCITS ETF and the L&G Enhanced Commodities UCITS ETF. The expansion of this range shows how strong and constant the demand for solutions with low correlation to other asset classes which, at the same time, allow investing in opportunities within the real economy is. Today’s launch also adds to LGIM’s range of thematic energy and resources ETFs, which includes the L&G Clean Energy UCITS ETF, the L&G Battery Value-Chain UCITS ETF and the L&G Hydrogen Economy UCITS ETF ; all solutions that allow exposure to the growth potential of the energy transition.
Aanand VenkatramananHead of ETFs for EMEA at LGIM, commented:
“We are very happy to be able to launch this innovative commodity ETF, providing investors with a unique investment solution, which allows them to expose themselves to the growth potential of the energy transition, while also enjoying protection against inflation and low correlation to other asset classes. Just like the industrial revolution, the energy transition is a story of commodities, but the protagonists are different. Compared to today’s energy mix, we believe this is based on new inputs, which in our opinion are underrepresented in current commodity portfolios. This is why we built the ETF around metals and transition energy sources and pricing carbon dioxide; so as to intercept the next phase of history, with its demand and its opportunities.”
Steven de VriesHead of Wholesale UK, Europe and Latin America di LGIM, ha aggiunto:
“The demand for solutions that mitigate inflationary risk and provide uncorrelated market exposure has grown significantly in recent times, also due to the macroeconomic environment. If we add to this the unique proposal presented by the Energy Transition ETF, we understand how the strategy becomes particularly attractive. We are very proud of this launch and of giving investors the opportunity to maximize their exposure to the energy transition through a liquid and diversified solution.”
The ETF is aimed at a public of wholesale and institutional investors and will also be listed in Italy. The ETF is classified as Article 6 under the Sustainable Finance Disclosure Regulation and will be managed by LGIM’s expert team.