(MSRUSA) UBS(Lux)Fund Solutions – - Ratings and Ratios

Here’s what you need to know about the UBS(Lux) Fund Solutions – MSCI Emerging Markets Socially Responsible UCITS ETF (Ticker: MSRUSA). This ETF is designed to track the performance of the MSCI Emerging Markets Index, but with a socially responsible twist. It filters out companies that don’t meet strict ESG (Environmental, Social, and Governance) criteria, aligning with the UN Global Compact principles. This makes it a solid option for investors looking to balance growth potential with sustainability.

The fund is domiciled in Switzerland and listed on the SIX Swiss Exchange. With an AUM of $1.32 billion, it’s a sizeable ETF, which typically means lower trading costs and tighter spreads. It’s structured as a UCITS-compliant ETF, which is a European regulatory framework that ensures transparency, liquidity, and investor protection. This makes it accessible to both institutional and retail investors across Europe and beyond.

What’s important for investors to note is that this ETF focuses on emerging markets, which come with their own set of risks and rewards. Emerging markets can offer higher growth potential compared to developed markets, but they also face challenges like political instability, currency volatility, and regulatory changes. The socially responsible angle adds another layer of screening, which may reduce the universe of investable companies but also aligns with the growing demand for sustainable investing.

From a portfolio construction standpoint, this ETF provides diversified exposure to emerging markets while adhering to ESG principles. It’s a passive investment strategy, meaning it aims to replicate the index rather than try to outperform it. This typically keeps costs low, which is a key advantage for long-term investors. However, like any ETF, it’s subject to tracking error, and the ESG screening process may lead to slight deviations from the underlying index.

For fund managers, this ETF could serve as a core holding for emerging market exposure with a sustainability focus. It could also be used as a tool for risk reduction, as ESG-compliant companies may exhibit lower volatility during market downturns. However, it’s worth noting that the exclusion of certain sectors or companies may impact sector weightings compared to the broader MSCI Emerging Markets Index.