UBS Launches ‘ESG Elite’ Dividend Aristocrats ETFs Targeting Sustainable Dividends

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UBS Asset Management has introduced a new suite of income-focused exchange-traded funds (ETFs) called the ‘Dividend Aristocrats ESG Elite’ ETFs. These ETFs aim to provide exposure to global developed and US equity markets while focusing on sustainable dividends and strict environmental, social, and governance (ESG) criteria.

The first fund in the suite, the UBS ETF (IE) S&P Dividend Aristocrats ESG Elite UCITS ETF (GLDVD), was created by repurposing an existing UBS global dividend ETF. The fund had approximately $200 million in assets during its conversion and carries an expense ratio of 0.30%. The second fund, the UBS S&P USA Dividend Aristocrats ESG Elite UCITS ETF (USDVD), is a new addition with an expense ratio of 0.40%.

These ETFs are listed for trading on the SIX Swiss Exchange, Deutsche Börse Xetra, and Borsa Italiano. Additionally, they are classified as Article 8 products under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

The funds are linked to socially responsible versions of the well-known ‘Dividend Aristocrats’ index strategy developed by S&P Dow Jones Indices. Dividend aristocrats are companies that have maintained or increased their dividend payments for a specified number of years. The investment thesis behind this strategy is that such companies may provide sustainable income and demonstrate favorable fundamental characteristics like consistent operating earnings, steady cash flow growth, and corporate discipline in challenging market conditions.

The global Dividend Aristocrats index includes companies that have consistently maintained or increased dividends for at least ten years, while the US index targets firms with a 20-year track record of consistent dividend growth. Companies with dividend yields above 10% are excluded to avoid potential dividend traps.

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