ETFMG, Breakwave launch maritime decarbonization ETF

ETF Managers Group  has launched a new thematic equity ETF in partnership with Breakwave Advisors that provides exposure to companies actively reducing the carbon footprint of the global maritime sector. ETFMG launches maritime decarbonization ETF The ETFMG Breakwave Sea Decarbonization Tech ETF (BSEA US) has been listed on NYSE Arca with an expense ratio of 0.75%.

Source: ETFMG, Breakwave launch maritime decarbonization ETF

According to the International Maritime Organization, the shipping industry accounts for around one billion metric tons of greenhouse gases emitted per year, approximately equal to 3% of total global carbon emissions.

With governments around the world pledging to meet ambitious decarbonization targets, the maritime industry is under increasing pressure to better manage its carbon footprint.

BSEA targets companies at the forefront of addressing this challenge by investing in firms that are developing cleaner propulsion (including alternative fuels, batteries, and fuel cells), carbon capture technologies, and offshore wind development.

It is linked to the Marine Money Decarbonization Index which was developed by Maritime Transformation Partners, a collaboration between Breakwave Advisors, Sea/Switch Partners, and Marine Money.

The index selects its constituents from a universe of developed market stocks with market capitalizations above $100 million.

An index committee screens for companies aligned with the maritime decarbonization theme based on factors such as a firm’s business description, product lines, investment growth plans, exposure to the maritime sector, and most recently reported revenue by segment.

The committee then selects 20 “Maritime decarbonization Leaders” which are each assigned a weight of 4% in the index.

These firms must have a minimum market capitalization of $500m and satisfy one of the following three requirements: they derive the majority of their revenue from marine decarbonization initiatives; they invest the majority of their research and development in marine decarbonization technologies; or they are a stakeholder in a marine decarbonization demonstration project recognized by the Global Maritime Forum.

The remaining 20% of the index is equally divided between another 20 to 40 companies with promising developments or significant investment in relevant marine decarbonization initiatives but have not yet reached the operational stage.

The index is reconstituted and rebalanced on a quarterly basis.

The fund is the second maritime-focused ETF from ETFMG and Breakwave Advisors. The Breakwave Dry Bulk Shipping ETF (BDRY US) provides more generalized exposure to the global shipping industry by going long futures contracts for dry bulk shipping space – primarily used to transport major hard commodities such as iron ore, coal, grain. BDRY houses $90m in assets and comes with an expense ratio of 3.32%. It is one of the best-performing ETFs year-to-date with a return of 267.9%, as of the end of August.

Ocean decarbonization

Sam Masucci, Founder and CEO of ETFMG, said: “We are excited to bring yet another first to the market with BSEA, a product that answers investor demand for access to these disruptive technology companies at the forefront of ocean decarbonization.”

John Kartsonas, Founder and Managing Partner of Breakwave Advisors: “BSEA is a key step towards capitalizing on the ocean decarbonization transition by providing investors with an easy way to track the performance of publicly-traded sector leaders backed by comprehensive research and analytics.”

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