Singapore's Largest Equity ETF: BlackRock and SGX's $580M Climate Action Fund

Bombolo | News and Media

In a groundbreaking move, the Singapore Exchange (SGX) and BlackRock, the world's largest asset manager, have joined forces to launch a pioneering climate action fund aimed at promoting sustainable investing in Asia. The iShares MSCI Asia ex-Japan Climate Action ETF, boasting assets under management totaling US$426 million (S$580 million), has taken the spotlight as the largest equity ETF ever introduced in Singapore.

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What Are ETFs and Their Significance?

Exchange-traded funds (ETFs) are financial instruments that mirror the performance of a specific index, typically composed of a basket of underlying assets or stocks. ETFs offer investors a diversified and cost-effective way to invest compared to buying individual stocks.

Charting the Low-Carbon Path

This innovative fund is designed to monitor companies as they progress on their journey towards lower carbon emissions. It receives strong support from Prudential, a major regional asset owner, backed by a consortium of investors including Temasek and Singlife. BlackRock emphasizes that this ETF represents a significant stride in the evolution of global low-carbon transition investments, granting investors easy access to leading Asia-Pacific (ex-Japan) companies committed to reducing their carbon footprint.

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Ideal for Climate-Conscious Investors

The iShares MSCI Asia ex-Japan Climate Action ETF is particularly appealing to investors with low-carbon transition objectives. It serves as a gateway to pioneering companies at the forefront of the low-carbon transition across the Asia-Pacific region. Peter Loehnert, Asia-Pacific head of iShares and index investments at BlackRock, highlights the vast potential for climate-focused investments in the Asia-Pacific, the world's largest and fastest-growing region for energy transition investments.

Expanding Global Footprint

This isn't the first climate-oriented iShares ETF. It marks the third in a series aimed at tracking MSCI Climate Action Indexes, following launches in the United States and Japan just three months ago. With an annual management fee of a mere 0.18 percent, this fund follows the MSCI Asia ex-Japan Climate Action Index. This index selects companies from the global industry classification standard sector's top 50 percent, based on criteria like science-based targets, climate risk management, and green business revenue.

Mobilizing Capital for Real Change

Michael Syn, senior managing director and head of equities at SGX Group, believes that this listing will mobilize capital and foster solutions to address climate change effectively. SGX, in collaboration with BlackRock and MSCI, is dedicated to creating a new global ecosystem of climate-related instruments, including this ETF and climate action derivatives introduced earlier in the year. These tools empower investors to build diverse portfolios of climate-conscious assets, allowing them to contribute to the transition while benefiting from potential financial gains.

As the anchor investor of this groundbreaking fund, Prudential Group's Chief Investment Officer, Don Guo, asserts their commitment to investing in companies leading the transition. This aligns with Prudential's mission to facilitate a systematic green transformation across all sectors.

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  1. What is the iShares MSCI Asia ex-Japan Climate Action ETF?

    The iShares MSCI Asia ex-Japan Climate Action ETF is a pioneering exchange-traded fund designed to track leading Asia-Pacific companies committed to reducing carbon emissions.

  2. How does an ETF work?

    An ETF mirrors the performance of a specific index by investing in a diversified portfolio of underlying assets or stocks.

  3. Why is sustainable investing important?

    Sustainable investing is crucial for addressing environmental and social challenges while potentially generating financial returns. It allows investors to support companies that are making positive contributions to the planet and society.

  4. What is the significance of the low management fee for this ETF?

    The low annual management fee of 0.18 percent makes this ETF an attractive and cost-effective option for investors seeking exposure to climate-conscious companies in the Asia-Pacific region.

  5. How can investors benefit from climate-conscious investments?

    Investing in climate-conscious assets not only aligns with environmental goals but can also offer financial upside as companies increasingly focus on sustainability and green initiatives.