The latest news on investment offerings, financial products and other services relevant to wealth advisors and their clients.

BlackRock has launched a range of UK-domiciled sustainable iShares index mutual funds to address what the US firm says is a gap in the UK wealth market for strategies that help clients make a sustainable transition with indexing. 

The range comprises five funds covering regional and country-specific equity exposures which maximize ESG characteristics, reduce carbon emissions intensity by at least 30 per cent whilst remaining close to the parent benchmark, BlackRock said in a statement yesterday. 

The firm said it is launching the offerings at a time when the UK is entering a period of “accelerated growth for indexing across wealth portfolios.” BlackRock said it expects levels of 10 to 20 per cent within the portfolios of financial advisors, traditional and digital wealth managers and private banks to double over the next three years. 

“Investors across the country, including pension funds, wealth managers and private banks, are turning to solutions that enable them to incorporate ESG considerations into their standard portfolios,” Manuela Sperandeo, BlackRock’s EMEA head of sustainable indexing, said.

BlackRock has worked with Morningstar Indexes to create ESG equity indexes covering global, regional and country-specific exposures. Each index has been designed to maintain a target tracking error, assigned for each geography, which reflects UK investor preferences to match the performance of the parent broad market indexes closely. The Morningstar ESG Enhanced Index methodology applies a set of ten exclusionary screens to limit each fund’s exposure to controversial activities.

As mentioned here this week, Morningstar has culled more than 1,200 funds with a combined $1.4 trillion in assets from its European sustainable investment list, raising questions about how far the problem of so-called “greenwashing” goes in the industry. (The term refers to firms allegedly making their investments appear more eco-friendly than they are.)