Tinkoff Capital Sets Up Funds to Invest in ESG, Cybersecurity and Emerging Markets

  • Investment , Banking
  • 04.11.2021 01:45 pm

Tinkoff Capital has set up three new exchange-traded funds (ETFs): the Tinkoff ESG Leaders Fund, the Tinkoff Cybersecurity Fund and Tinkoff Emerging Markets Fund. The new ETFs facilitate investments in companies operating in segments that are enjoying strong growth: cybersecurity services and ESG leaders as well as the most promising industries in developing countries.

Many companies included in the funds are not available to unqualified investors.

The Tinkoff ESG Leaders Fund was developed by Tinkoff jointly with Sustainalytics (Morningstar Inc.), a global leader in assessing corporate sustainability. The fund tracks the Tinkoff World ESG Leaders Index*, which has enjoyed annual growth of 16.1%, in dollar terms, since 2002.

The fund’s portfolio includes 50 companies ranked at the top of Sustainalytics’ ESG rating. They are all leaders in their industries in terms of their compliance with standards of social responsibility, corporate governance and environmental protection; they have also reported a positive operating cash flow according to International Financial Reporting Standards for at least the last five years. They include Sony, Moody’s, NVIDIA, HP, Adobe, Adidas and others.

The companies within the fund represent diverse industries: 34.8% of the fund is represented by manufacturers of consumer goods; 27%, by IT companies; 14%, by suppliers of goods and services in the healthcare sector.

The Tinkoff Cybersecurity Fund invests in companies developing software and hardware solutions for cybersecurity – one of the fastest-growing and most promising sectors in the IT industry.

The fund tracks the Tinkoff Cybersecurity Total Return Index USD*, which includes 31 publicly traded companies from the United States, Israel and India. These companies’ main revenues come from cybersecurity solutions. The index has demonstrated annual returns of 25.7%, in dollar terms, since 2016.

The following companies are just some of those included in the fund: Zscaler Inc, an American developer of cloud-based software for the secure operation of applications online; McAfee, a leading global developer of antivirus software; and Cisco, one of the world’s largest suppliers of network hardware and software (Cisco is also included in the Tinkoff Sustainable Development Leaders Index fund).

The Tinkoff Emerging Markets Fund invests in 50–60 of the largest companies in developing countries, where growth rates exceed those of developed countries. The fund tracks the Tinkoff Emerging Markets Total Return Index USD*, which includes public companies with the largest market capitalisation in developing countries. This strategy has resulted in annual returns of 23.2%, in dollar terms, since 2016.

Diversified both by country and by industry, the fund’s portfolio includes companies from 10 different industries in Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Peru, the Philippines, Russia, South Africa, Taiwan, Turkey and Uruguay. Energy companies account for 20.2% of the fund; companies in the raw materials industry, 19.2%; consumer goods manufacturers, 16.7%; and companies operating in the financial sector, 14.1%.

Ruslan Muchipov, CEO of Tinkoff Capital Management Company, said:

When setting up the new funds, we were guided primarily by the growth potential of the represented markets and industries. This is an investment in the future, when business will focus on social responsibility and an ethical attitude to available resources, i.e. ESG principles.

“Transparency and business management security are one aspect of ESG; in a rapidly digitalising world, the only way to achieve this is by developing cybersecurity technologies. According to MarketsandMarkets forecasts, the global information security market in 2021 will be worth USD 217.9 billion, and it will reach USD 345.4 billion by 2026. There will be a steadily growing need for data protection as a result of the further penetration of digital technologies into various spheres of life, which means that there will also be greater demand for stock in the companies developing such technologies. This is an indication of the potential earning capacity of investments in the Tinkoff Cybersecurity Fund, the first Russian fund to invest in this industry.

“Emerging markets are another area of investment with potentially high returns. These countries’ emerging economies are enjoying rapid growth at a rate that surpasses that of developed countries. Therefore, the Tinkoff Emerging Markets Fund will enable investors not only to earn potential profits from this growth but also to maintain diversification in terms of countries.”

Shares in the companies included in the new funds are weighted based on the market value of their share capital. No single instrument can account for more than 5% of the total portfolio.

The funds are available at all Tinkoff Investment tariffs without any brokerage fees for buying or selling units on the Tinkoff Investment platform.

*The Tinkoff Cybersecurity Total Return Index USD, Tinkoff World ESG Leaders Index and Tinkoff Emerging Markets Total Return Index USD indices are calculated by JSC Tinkoff Bank.

The securities and other financial instruments mentioned in this overview are provided for informational purposes only; the overview is not an investment idea, advice, recommendation or offer to buy or sell securities or other financial instruments.


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