Stockholm (NordSIP) – Lyxor has launched five new thematic ETFs focusing on the investment megatrends reshaping the globe, including the digital economy, disruptive technology, future mobility, smart cities and the consumption habits of Millennials.
Lyxor’s new suite of ETFs includes the following 5 funds: the Lyxor MSCI Smart Cities ESG Filtered (DR) UCITS ETF, the Lyxor MSCI Future Mobility ESG Filtered (DR) UCITS ETF, the Lyxor MSCI Digital Economy ESG Filtered (DR) UCITS ETF, the Lyxor MSCI Disruptive Technology ESG Filtered (DR) UCITS ETF and the the Lyxor MSCI Millennials ESG Filtered (DR) UCITS ETF. Each index is filtered based on MSCI ESG Ratings, controversy scores and for certain business activities, with final stock weights based on a combined score of three fundamental metrics. At the heart of this suite of ETFs is a methodology that uses expert knowledge to identify a list of keywords relevant to each of these themes, which are applied used by an artificial intelligence search algorithm to identify relevant companies.
“The world is changing rapidly, as evidenced by the current Covid-19 crisis, and humans are innovating faster than ever. Mass working from home, for example, has introduced millions more people to the digital economy,” says Arnaud Llinas, Head of Lyxor ETF & Indexing. “Meanwhile, health concerns have prompted discussions on the future of mobility and how smart cities could help combat the spread of infectious diseases. The future of sector investing looks very different. That’s why these ETFs mark a new frontier for passive investment. ETFs may have started life as simple market access instruments, but they have today become a way for investors to gain precise exposure to the emerging themes of our age and stay one step ahead of change. With these launches, Lyxor is proudly continuing its long tradition as Europe’s most innovative ETF provider.”
“It’s widely acknowledged that there are a number of megatrends which will impact the global economy and societies. These MSCI thematic indices provide investors with the tools to assess and measure these structural trends using our scalable and flexible methodology,” Stephane Mattatia, Global Head of Thematic Indexes at MSCI, added.
The Digital Natives
One of the elements that stands out in this new suite of Lyxor ETFs is the Millenials fund. While the other ETFs focus on technological and supply-side changes in the global economy, the millennials ETF singles out instead a specific type of consumer.
“Millennials – or Generation Y – are set to have a huge impact on the global economy. Their spending and saving decisions will mean the demise of some long-established business models and the rise of new ones,” Llinas told NordSIP. “Millennials grew up with the internet and are ‘digital natives’ who are enthusiastic adopters of new and innovative technologies that fit in with their lifestyle choices. They like smart technology for phones, tablets, cameras, speakers, TVs, and credit cards. They live and breathe online through social media and the cloud, where a huge amount of their data is stored.”
“Our millennials thematic ETF selects companies attuned to the mindset, tastes, priorities, and aspirations of Generation Y. The investment process uniquely blends human oversight by industry experts, with state-of-the-art AI techniques that aim to capture the theme in its entirety. This process ensures that the portfolio goes beyond the most obvious sectors and the familiar US or global brand names. It includes more specialist businesses that will be particularly affected by millennials’ habits, and regional players that have a powerful position in some of the larger emerging markets,” Llinas says.
Coping with COVID19
The other salient issue at the moment is, of course, the Coronavirus. Given the impact of this pandemic, we were keen to hear Llinas’ take on the impact of the virus on the behaviour of investors.
“I am both cautious and humble in discussing the consequences of the crisis since we are currently in the middle of it. The health crisis though exhibits certain similarities with climate issues, including the fact that for too long we have ignored how dependent our economic and social systems are on natural factors,” Llinas says.
“In this respect, what is happening at the moment argues for progressing even further in responsible investment practices. In particular, this will include attaching greater importance to long-term views, rather than to short-term considerations, and a stronger commitment to climate transition. We are convinced that asset managers can be true drivers of this transition, by combining innovation in investment vehicles, proactive dialogue with companies, and a tougher voting policy on environmental issues in general shareholders’ meetings,” Llinas says.
According to Llinas, this suite of ETFs allows investors to tap into the future of investing post-crisis. “The world is changing rapidly, as evidenced by the current Covid-19 crisis, and humans are innovating faster than ever. Mass working from home, for example, has introduced millions more people to the digital economy. Meanwhile, health concerns have prompted discussions on the future of mobility and how smart cities could help combat the spread of infectious diseases. The future of sector investing looks very different. By combining the three pillars of transparent indexing, cutting edge data science and human insight on trend development these Lyxor ETFs are unique in the field of thematic investing. They blend the best of passive and active approaches together to give investors liquid, low-cost access to the investment themes powering change, allowing investors to capture investment opportunities that go beyond traditional sectors and market-cap-weighted funds,” Llinas concludes.
Image courtesy of Lyxor