iShares MSCI USA SRI UCITS ETF – ETF Review

iShares MSCI USA SRI UCITS ETF - ETF Review

Overall Assessment

OUR RATING
2/5

This ETF is very poorly diversified and impacted by financially material ESG Scores.

While it has recently outperformed, the risk-adjusted performance outlook, given that investors’ taste for sustainability has driven up valuations, is negative.  

ETF Snapshot

Below is an ETF Review that was performed by our team.

For each fund characteristic, we link to the correspondent guide to give you more context.

CharacteristicETF
Asset ManagerBlackRock
Accumulating TickersSUAS, SUUS, QDVR
Distributing TickersSRIL, 36B6
Sustainability StrategyESG and SRI Blend
ESG Rating ScreeningYes
Ethical (SRI) ScreeningYes
Number of ESG ExclusionsVery High
Number of SRI ExclusionsVery High
Planet ImpactModerate (Excludes Sin Stocks)
Parent BenchmarkMSCI USA
Est. Diversification Reduction75%
Inception DateJul-16
Expected Performance vs. ParentLong-Term Underperformance
Income Distribution TypesAccumulating
DomicileIreland
Currency RiskUnhedged (Hedged versions also available)
ReplicationPhysical (Full Replication)
Settlement CurrenciesUSD, EUR (Both), GBP (Accumulating Only)
Total Expense Ratio0.20%

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What is iShares MSCI USA SRI UCITS ETF?

  • iShares MSCI USA SRI UCITS ETF is the largest ESG + SRI Blend ETF in the World.
  • The ETF tracks the MSCI USA SRI Select Reduced Fossil Fuels index.
  • iShares MSCI USA SRI UCITS ETF only retains around 25% of the best-in-class ESG-rated stocks.
  • iShares MSCI USA SRI UCITS ETF also includes a number of SRI screens.
  • The ETF manager applies a cap of 5% to holdings.

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Is iShares MSCI USA SRI UCITS ETF Safe?

  • iShares MSCI USA SRI UCITS ETF is managed by BlackRock, the largest Asset Manager in the World.
  • The custodian is State Street, the largest custodian bank in the world.
  • Commercial risk is limited given that the ETF is one of the largest ESG ETFs in the World with over $7bn of Assets Under Management.

What are iShares MSCI USA SRI ETF Top Holdings?

  • iShares MSCI USA SRI UCITS ETF top 5 holdings include Home Depot, Nvidia, Microsoft, Coca-Cola, Pepsi.
  • Its holdings diverge materially from its parent benchmark, the MSCI USA Index, which includes amongst its top 5 holdings Apple, Microsoft, Amazon, Alphabet and United Health Group.
  • Given its focus on retaining only around 25% of top ESG rated securities and its SRI screening, the ETF excludes a number of Growth Stocks, for example Apple, Alphabet or Meta Platforms.

Is iShares MSCI USA SRI UCITS ETF diversified?

  • The iShares MSCI USA UCITS SRI ETF is not well diversified.
  • Out of the total 623 names in the MSCI USA, the iShares based on the MSCI SRI USA Index only retains 151 Equities (diversification reduction of around 76% versus the parent Index).

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What are iShares MSCI USA SRI UCITS ETF top sectors?

  • iShares MSCI USA SRI UCITS ETF Top 5 sectors include Healthcare, Financials, Information Technology, Consumer Discretionary and Consumer Staples. Healthcare is the largest sector, accounting for around 20% of total market value.  
  • The composition diverges from its parent benchmark, the MSCI USA Index, which includes Information Technology, Healthcare, Consumer Discretionary, Financials and Consumer Staples. Information Technology is the largest sector, accounting for around 26% of total market value.

What ESG and SRI screenings are being applied?

  • iShares MSCI USA SRI UCITS ETF does not include Equities involved in UNGC Controversies, Conventional or Controversial Weapons, Tobacco, Thermal Coal, Unconventional Oil and Gas, Pornography, Gambling or Alcohol.
  • iShares MSCI USA SRI ETF retains only around 25% of the top ESG rated Equities, based on the MSCI financially material ESG Ratings.

What is iShares MSCI USA SRI UCITS ETF Index performance?

  • As of December 2022, the ETF’s benchmark, the MSCI USA SRI Select Reduced
    Fossil Fuels Index, as well as MSCI USA SRI Index, have both outperformed the parent benchmark, the MSCI USA Index, over 3-year, 5-year and 10-year periods.
  • For example, its 5-year total return is 10.95% versus 8.75% for the parent index.

In which currencies is iShares MSCI USA SRI UCITS ETF available?

  • iShares MSCI USA SRI UCITS ETF is available in UCITS format in the following currencies: USD, EUR, GBP, MXN and COP. Currency hedged versions are also available.
  • iShares MSCI USA SRI ETF includes accumulating and distributing share classes.

Similar Questions

How does iShares MSCI USA SRI UCITS ETF composition compare to iShares ESG MSCI USA Leaders UCITS ETF and iShares MSCI USA ESG Enhanced UCITS ETF?

All three Funds are some of the largest ESG ETFs from BlackRock. Read how their holdings differ.

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What will impact iShares MSCI USA SRI UCITS ETF future returns?

Based on Economic Theory, expected returns will be impacted by both the fund’s factor exposure and investors’ taste for sustainability. Read how both of these factors may impact future returns.

 

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