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LGIM expands ETF range with the launch of Energy Transition Commodities ETF
As a market first , the Energy Transition ETF offers exposure to a unique and diversified basket of commodities central to the energy transition.
17 Apr 2024
Legal & General Investment Management (“LGIM”) has today announced the expansion of its ETF range with the launch of the L&G Energy Transition Commodities UCITS ETF (“the Fund”). The Fund aims to provide exposure to the three supporting pillars of the energy transition through commodity futures, harnessing the growth potential embedded within the next chapter of the global energy story.
The Fund, which is a first to market, offers investors liquid and diversified exposure to a combination of commodities central to the energy transition; providing access to three distinct commodity groups with supportive demand side dynamics:
- Transition metals that are needed to produce, store and distribute clean energy
- Lower-carbon transition energy sources such as natural gas and ethanol; which can help overcome peak energy demand and the challenge of ‘hard to abate’ sectors
- Carbon pricing that increases the cost of polluting activities, incentivising the switch to low-and-no-carbon activities
Offering diversification and hedging opportunities, the Fund provides a differentiated proposition with over 50% of the constituents not typically found in traditional commodity portfolios – many of which have been made available to UCITS investors for the first time1. The Fund provides access to 18 liquid commodities in a diversified and liquid manner, including an allocation to carbon markets.
Illustrating LGIM’s strategic intent to diversify, the Fund builds on LGIM’s broader range of commodities ETFs – including the L&G All Commodities UCITS ETF, the L&G Longer Dated All Commodities UCITS ETF and the L&G Enhanced Commodities UCITS ETF. The expansion of the range reflects the continued demand for investment solutions with low correlation to other asset classes, allowing clients to tap into potential growth opportunities across the real economy. Today’s launch also complements LGIM’s thematic ETFs within the energy and resources range, which include the L&G Clean Energy UCITS ETF, L&G Battery Value-Chain UCITS ETF and L&G Hydrogen Economy UCITS ETF; all of which provide investors access to the growth potential of the energy transition.
Aanand Venkatramanan, Head of ETFs, EMEA at LGIM: “We are incredibly excited to bring this innovative commodities ETF to market, providing a truly unique proposition which enables investors to seek to benefit from the significant growth potential of the energy transition, whilst also providing inflation risk mitigation and uncorrelated exposure.“Like the industrial revolution, the energy transition is a commodity story, but with a new cast of characters. Compared with today’s energy mix, we believe the energy transition is built on new inputs, which in our view are underrepresented in current commodity portfolios. This is why we built the ETF around transition metals, transition energy and carbon pricing; capturing the next phase of demand, and opportunity, in the story.”
Steven de Vries, Head of Wholesale UK, Europe and Latin America at LGIM: “Demand for strategies that provide inflation risk mitigation and uncorrelated market exposure has been significant of late, not least due to the macroeconomic backdrop. Overlay this with the uniqueness of the proposition the Energy Transition ETF presents, and this becomes a particularly compelling strategy. We’re extremely proud of today’s launch; allowing investors to maximise their exposure to the energy transition through a diversified, liquid, and truly differentiated strategy.”
The Fund will be available to both wholesale and institutional investors, registered in the UK, France, Germany, Italy, Netherlands, Norway, Denmark, Sweden, Finland, Austria, Luxembourg and Spain, as well institutional investors in Singapore. It has been categorised as Article 6 under the Sustainable Finance Disclosure Regulation and will be managed by LGIM’s expert ETF team, which has grown into one of the largest global providers over the last 25 years.
Further information
Verena Moench
Communications Manager
Asset Management
Jessye Brandon
Senior PR Executive
LGIM Real Assets
T: 07584498775
Notes to editors
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at HY24) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 11 December 2024, Legal & General has a market capitalisation of 13.7 billion.
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.2 trillion1 ($1.5tn, €1.3tn, CHF 1.2tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1Data as at 31 December 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions.