iShares Paris-Aligned Climate MSCI USA ETF (PABU)PABU

iShares Paris-Aligned Climate MSCI USA ETF (CLIM) Overview

Profile: The iShares Paris-Aligned Climate MSCI USA ETF is an actively managed ETF that invests in US equities aligned with the goals of the Paris Agreement. The ETF focuses on companies that contribute to the transition to a low-carbon economy while reducing carbon emissions and mitigating climate-related risks. CLIM utilizes a diversified approach across sectors, including:

• Financials (29%)
• Information Technology (17%)
• Health Care (15%)
• Industrials (10%)
• Consumer Discretionary (8%)
• Consumer Staples (8%)
• Energy (6%)
• Materials (5%)
• Utilities (2%)

Objective: CLIM aims to achieve long-term capital appreciation by investing in companies committed to reducing their carbon footprint and contributing to the global climate change mitigation effort.

Issuer: iShares is a leading global provider of exchange-traded funds (ETFs) with a strong reputation and a long track record in the market. It is known for its comprehensive ETF offerings and commitment to innovation and sustainability. The iShares Paris-Aligned Climate ETFs are managed by BlackRock, a global investment management firm with extensive experience and expertise in sustainable investing.

Market Share: CLIM has a relatively small market share in the climate-focused ETF space, with approximately 0.2% of the total assets under management. However, it is still considered a significant player in this growing niche market.

Total Net Assets: CLIM currently has approximately $1.14 billion in total net assets.

Moat: CLIM's competitive advantages include:

• Paris-aligned investment strategy: CLIM is one of the few US-focused ETFs explicitly aligning with the Paris Agreement goals, making it attractive to investors seeking climate-conscious investment opportunities.
• Active management: The active management approach allows CLIM to select and overweight companies that demonstrate a strong commitment to climate action and are well-positioned to benefit from the transition to a low-carbon economy.
• Strong track record: The underlying index, MSCI USA Climate Paris-Aligned Index, has outperformed the broader US market in recent years, demonstrating the potential for strong returns.

Financial Performance: CLIM has a relatively short track record, having launched in March 2022. However, it has outperformed the S&P 500 Index since its inception, delivering a return of 5.1% compared to the S&P 500's 2.4%.

Growth Trajectory: The global climate-focused ETF market is expected to experience significant growth in the coming years, driven by increasing investor demand for sustainable investment solutions. CLIM is well-positioned to benefit from this trend, given its unique Paris-aligned strategy and strong track record.

Liquidity: CLIM has an average trading volume of approximately 30,000 shares per day, providing reasonable liquidity for investors looking to buy or sell shares. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics: Key factors affecting CLIM's market environment include:

• Government policies: Government policies supporting the transition to a low-carbon economy can positively impact CLIM's performance.
• Technological advancements: Technological advancements in clean energy and carbon capture can drive growth in the companies CLIM invests in.
• Investor demand: Increasing investor demand for sustainable investment options can lead to higher inflows into CLIM.

Competitors: Key competitors in the climate-focused ETF space include:

• Vanguard Climate Change ETF (VYM)
• SPDR S&P 500 Climate Paris-Aligned ETF (SPCN)
• iShares Global Clean Energy ETF (ICLN)

Expense Ratio: CLIM has an expense ratio of 0.30%, which is considered average for actively managed ESG-focused ETFs.

Investment Approach and Strategy: CLIM employs an active management strategy to track the MSCI USA Climate Paris-Aligned Index. This index selects companies based on their alignment with the Paris Agreement goals, focusing on reducing carbon emissions and transitioning to a low-carbon economy. The ETF holds a diversified portfolio of stocks across various sectors, aiming to provide investors with broad exposure to climate-conscious companies.

Key Points:

• CLIM is a Paris-aligned ETF focusing on US companies contributing to the transition to a low-carbon economy.
• The ETF has a diversified portfolio across sectors, including financials, technology, and healthcare.
• It employs an active management strategy and has a relatively short but strong track record.
• CLIM has a moderate expense ratio and offers good liquidity.

Risks:

• Market volatility: CLIM's value can fluctuate with the overall market, potentially leading to losses for investors.
• Climate-related risks: The companies CLIM invests in may be affected by climate-related events or regulations, impacting the ETF's performance.
• Active management risk: The ETF's performance depends on the success of the active management team's stock selection and portfolio construction decisions.

Who Should Consider Investing:

• Investors seeking exposure to US companies contributing to the fight against climate change.
• Investors who prefer actively managed ETFs with a strong focus on ESG criteria.
• Investors with a long-term investment horizon and a tolerance for potential volatility.

Fundamental Rating Based on AI: 8/10

CLIM receives a strong fundamental rating based on AI analysis. The analysis considers factors such as the ETF's financial performance, management quality, competitive positioning, and market growth potential. CLIM demonstrates strong fundamentals with a solid track record, a well-defined niche strategy, and a positive outlook in a growing market segment.

Resources and Disclaimers:

• iShares Paris-Aligned Climate MSCI USA ETF website: https://www.ishares.com/us/products/275337/ishares-paris-aligned-climate-msci-usa-etf
• MSCI USA Climate Paris-Aligned Index Methodology: https://www.msci.com/documents/1296103/1537004/MSCI+USA+Climate+Paris+Aligned+Index+Methodology+-+Mar+2023.pdf
• Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.