Royal Bank of Canada (RBC) has issued its first ESG-linked guaranteed investment certificate (GIC).

The fully capital-protected product tracks the performance of MSCI World ESG Quality Select Low Volatility Index (USD) with an investment period of four or six years, offering no minimum or maximum rates of return.

‘In recent years, we’ve also seen a growing focus on looking beyond a company’s balance sheet when making investment decisions,’ said Flora Do (pictured), vice president, term investments & savings at RBC. ‘ESG investing is a strategy for anyone who values the added layers of analysis when it comes to assessing a company’s outlook and wants to take ESG factors into account.’

The underlying index includes large and mid-cap securities across 23 developed markets (DM) countries with the aim of representing a strategy that seeks lower risk than the MSCI World index along with improvement in the quality, ESG and carbon emission intensity features. Its sister versions include the MSCI World ESG Quality Select Low Volatility 5% Decrement Index and the MSCI World ESG Quality Select Low Volatility 8% Risk Control Index.

In addition, the largest Canadian bank by market cap has launched the RBC North American MarketSmart GIC, linked to a customised basket of 20 equally weighted North America stocks including Bell, Coca-Cola, Pfizer, Johnson & Johnson, Canada’s big five banks and McDonald’s. It has a tenor of two, three or five years guaranteeing a minimum return with the maximum capped.

UBS completes index succession for two exchange-traded notes

The Swiss bank said on 2 August it completed the succession process for the Wells Fargo BDC Index with the MVIS US Business Development Companies Index for two exchange-traded notes (ETNs) on NYSE Arca.

The ETRACS Wells Fargo BDC Index ETN Series B is now ETRACS MVIS Business Development Companies Index ETN while the ETRACS Quarterly Pay 1.5X Leveraged Wells Fargo BDC Index ETN has been replaced by ETRACS Quarterly Pay 1.5x Leveraged MVIS BDC Index ETN.

UBS announced the index succession in April after Wells Fargo Securities, the index sponsor of the original indices, said the underlying assets would be terminated after the close of trading on July 30.

Ex-Merrill Lynch advisors have records cleared after winning US$3m whistleblower award

Glen Ringwall and Mark Manion, two former senior wealth management advisors at Merrill Lynch in the US, have seen 10 customer complaint records about several structured notes expunged – five each - by a Financial Industry Regulatory Authority (Finra) arbitrator on 22 July, according to a news report of AdvisorHub.

They filed the request in September 2020 after being awarded US$3m as whistleblowers by the Securities and Exchange Commission (SEC) in June 2019. Merrill Lynch Wealth Management allegedly made misleading statements to retail investors about several of its proprietary volatility-linked structured notes, which led to a US$10 million settlement with the SEC in 2016.

The notes, which had a two percent commission and a 0.75% trail, were billed as low-cost investments in the firm’s marketing and saw investors report large losses, according to the SEC.

They were ‘flawed in their design, due to hidden costs,’ said the Finra arbitrator, Leon Fox. The duo ‘testified credibly that they were diligent in investigating issues with the structured notes,’ and some customers who were sold the products remained their clients and wrote emails in support of the expungement.

Ringwall and Manion both joined UBS as private wealth advisors in 2012 shortly after their departure from the US bank.

Euronext licenses Cac 40 ESG index to Amundi

Euronext said on 2 August that its Cac 40 ESG index had been licensed to Amundi, Europe’s largest asset management company, to launch an exchange-traded fund (ETF).

Co-developed by Vigeo Eiris (V.E.), part of Moody’s ESG Solutions, the index went live in March and was designed to identify the 40 companies within the Cac Large 60 Index that are demonstrating the best ESG practices.

‘Responding to the growing demand for sustainable investment tools from market participants, the Cac 40 ESG is Euronext’s first national ESG index and is derived from the Cac 40 index family,’ said the index provider.