The MSCI USA Climate Action Equity ETF (USCA) from DWS Xtrackers, the largest ETF launch ever, debuted on the New York Stock Exchange.
Big solutions are needed for big issues, and big ETFs, very big ETFs. On Wednesday, the New York Stock Exchange listed the MSCI USA Climate Action Equity ETF (USCA) from DWS Xtrackers. The exchange-traded fund with a focus on climate change has assets worth almost $2 billion, making it by far the largest ETF launch ever.
Big, Bigger, Biggest
The debut of the world’s largest exchange-traded fund in April has become a yearly ritual, much like the blooming of cherry blossoms at this time of year. The Goldman Sachs MarketBeta US 1000 Equity ETF (GUSA), which gives “efficient and diversified access” to the top 1,000 US firms, began the previous year with a then-record $1.35 billion in assets. This access provides investors with “efficient and diversified access” to the greatest 1,000 US companies. One year ago, BlackRock launched their US Carbon Transition Readiness ETF (LCTU), which currently has assets of $1.2 billion.
It’s not a new concept to have massive ETFs focused on climate change. However, they do not exactly have a successful track record:
The LCTU share price has decreased by approximately 5% since the company first began trading, and the company has only experienced minimal growth since it began owning assets of approximately $1.4 billion. “It’s got anchor institutional investors that have stayed loyal,” Todd Rosenbluth, head of research at financial consultant VettaFi, told the Financial Times. “But the fund hasn’t received broader investor adoption.”
Meanwhile, the assets of the BlackRock World ex US Carbon Transition Readiness ETF (LCTD), which also began trading on the same day as LCTU in April 2021, have decreased from $500 million to $468 million.
Opinions Regarding Climate Change Rosenbluth remarked that in the United States there is a growing unfavorable mood forming towards environmentally oriented ETFs. A factual rebuttal that can modify the story could be “a successful launch with the support of a large institutional investor to a targeted approach.” To put it another way, if you want to be environmentally conscious, you have to think on a grand scale.