Skandia has launched Indexbevis Global Hållbarhet 2, a five-year certificate linked to the Solactive Global Ethical Low Volatility SEK Hedged Index. The product, which is open for subscription until February 3, allows Skandia to respond to the growing interest for ethical and sustainable investments in Sweden, according Wiveka Burvall (pictured), head of structured products, at Skandia Investment Management.
"There has been a growing awareness, but also demand, from our clients for products with exposure to ethical and/or sustainability themes," said Burvall. "To meet that demand we have had continuous discussions with our counterparties during 2016."
The Solactive Global Ethical Low Volatility SEK Hedged Index offers an interesting exposure towards global companies working actively for sustainability and environmental, social and governance (ESG), according to Burvall. "We think the product can be an interesting part of our clients' investment portfolios."
The companies included in the index are determined via a six-step method which starts with the global selection universe comprised in the MSCI World Index. Step two is an ethical selection, following that companies linked to fossil fuels and controversy, respectively, are excluded while the remaining companies are awarded an ESG rating where the 70% with the lowest score are excluded. What remains is an index including the 50 companies with the lowest realised volatility.
"The ESG screening process behind this particular index is reasonably similar to how Skandia's in-house ESG experts work in the listed equities and mutual fund space, which is an advantage," said Burvall adding that it is not critical that the index is denominated in Swedish krona. "The Swedish market is well familiar with indices denominated in other currencies."
Indexbevis Global Hållbarhet 2 is one of six Skandia products issued in collaboration with Handelsbanken since June 2016, although, according to Burvall, having a local counterparty is not a must. "Of course, many of our investors are appealed by products issued by a Swedish or Nordic bank. At the same time, the Swedish market and also the investors have developed their knowledge about banks outside Sweden. So at present, many of our clients are comfortable investing in products issued by international banks."
2016 was a difficult year for the Swedish structured products market with volumes down by around 50% from the previous year, according to SRP data. Skandia too was part of the malaise. The mutually owned long-term savings and financial group launched 62 products worth SEK496m (€52m) in 2016, down from 90 products with sales of SEK932m the previous year. However, Burvall remains upbeat and with positive expectations for 2017. "We hope to see a recovery in market volumes. At Skandia we will continue our work with offering products that can add value to our clients' investment portfolios," she said.
The Solactive Global Ethical Low Volatility SEK Hedged Index was launched, on August 11, 2016. The Index is based on 100 at the close of trading on the start date, July 29, 2013. The closing level of the index on January 24, 2017, was 178.56 points. Since the launch, 14 structured products linked to the index have been distributed in Sweden, including offerings from Handelsbanken (four), Skandia (three) and Swedbank (seven).
Click the link to view the index guidelines.
Related stories:
Sweden Market Review - December 2016
Mangold keeps it local with Solactive Sweden index