Rize Environmental Impact 100 – A True Impact ETF Targeting Companies Acting on Climate Change Mitigation
Rize Environmental Impact 100 has a first-of-its-kind investment strategy and Europe’s first truly environmental impact ETF. The LIFE ETF brings an innovative approach to sustinable investing, avoiding the sometimes blurry ESG ratings, Rize created a selection criteria based on the EU Taxonomy and in line with the Sustainable Finance Disclosure Regulation (SFDR).
What is Rize ETF and who is behind it?
Founded in 2019, Rize ETF is an interesting investing company established in London (UK) that offers innovative financial products aiming toward the future of the global economy. Rize ETF keeps sustainability and environmental impact as its focus and uses a thematic approach when designing their ETFs.
They have a well prepared and experienced team with roots in the ETF’s field. Its four co-founders have a lot of experience in European and American markets and srong expertise in ETF’s indexing markets.
What does Rize ETF Offer?
Rize ETF has a thematic approach based on future megatrends which can impact humanity. Those contemporary trends are the foundation for their ETFs, focusing on a diversified portfolio across basic resources, eco-friendly technology, cyber security, emerging markets, and more niche financial products such as pet markets.
The current ETFs in Rize portfolio
Rize Cybersecurity and Data Privacy UCITS ETF (CYBR): Targets stocks focused on cybersecurity and technology. CYBR ETF tracks the Foxberry Tematica Research Cybersecurity & Data Privacy index, providing exposure to public-listed companies that generate revenues from products that secure individuals and organizations against cyber threats. Established in February 2020, it has an expense ratio of 0.45% and total assets of 151 million USD. By the time of writing, CYBR is the Rize ETF with the best performance among the Rize ETFs.
Rize Medical Cannabis and Life Sciences UCITS ETF (FLWR): Targets stocks focused on Cannabis, and Health Care. FLWR ETF tracks the Foxberry Medical Cannabis & Life Sciences Index, providing exposure to public-listed companies that are positively exposed to the revolution in cannabis-derived medicine. Established in February 2020, it has an expense ratio of 0.65% and an AUM of 32 million USD.
Rize Sustainable Future of Food UCITS ETF (FOOD): Targets stocks focused on the future of the food industry, including those with a social and environmental focus and consumer staples. FOOD ETF replicates the performance of the Foxberry Tematica Research Sustainable Future of Food index which provides exposure to global public-traded companies that innovate across the food chain to build more sustainable, secure and fair global food systems. Established in August 2020, it has an expense ratio of 0.45% and an AUM of 268 million USD.
Rize Education Tech and Digital Learning UCITS ETF (LERN): Targeting stocks focused on education and learning technologies. LERN ETF replicates the Foxberry Holon IQ Education Tech and Digital Learning USD index, taking exposure to public-listed companies around the world involved in education technology and digital learning industry. Established in August 2020, it has an expense ratio of 0.45% and an AUM of 12 million USD.
Rize Environmental Impact 100 UCITS ETF (LIFE): It is a first-of-its-kind investment strategy and Europe’s first environmental impact ETF. We review the LIFE ETF in more detail in the sections below. Established in July 2021, it has an expense ratio of 0.55% and an AUM of 15 million USD.
Rize Digital Payments Economy UCITS ETF (PMNT): it aims to invest in companies belonging to the digital payments sector, including credit card networks, payment processors, payment infrastructure and software service providers. These solutions providers and crypto economy operators are accelerating the transition from cash payments to secure, speed and convenient digital transactions. Established in November 2021, it has an expense ratio of 0.45% and an AUM of 6 million USD.
Recently Rize ETF released two new funds:
- Rize Emerging Market Internet and Ecommerce UCITS ETF (EMRJ): Established in March 2022, it has an expense ratio of 0.55%.
- Rize Pet Care UCITS ETF (PETZ). Established in March 2022, it has an expense ratio of 0.45%
As we can see, Rize ETF has a diversified approach to ETFs, with a strong focus on technology and sustainability. Their largest ETF at the time of writing is Rize Sustainable Future of Food UCITS ETF (FOOD), followed by the Rize Cybersecurity and Data Privacy UCITS ETF (CYBR)
Regarding environmental risk, most Rize ETFs have good MSCI ESG ratings, ranging between “BB” and “AA”. Rize Sustainable Future of Food UCITS ETF (FOOD) and Rize Environmental Impact 100 UCITS ETF (LIFE) are funds with low ESG risk ratings (“AA”), closely followed by Rize Cybersecurity and Data Privacy UCITS ETF (CYBR) with an “A” ESG risk rating. Morningstar also gives good global sustainability ratings to the Rize ETFs, making it clear that Rize’s approach is strongly targeted toward sustainable investors.
Thematic investing, the Rize ETF way of finding attractive opportunities
On their website, Rize states:
“Thematic investing focuses on structural changes emanating from the shifting global landscape of economics, demographics, technology, and psychographics and from time-to-time regulatory mandates”
This approach is becoming a very popular strategy, allowing investors to look at structural changes and bet on long-term transformations and growing industries. This vision and approach sum up Rize’s investment strategy.
Review of Rize Environmental Impact 100 UCITS ETF, the LIFE ETF
Rize Environmental Impact 100 is the first ETF whose theme is focused exclusively on environmental impact. It tracks the Foxberry SMS Environmental Impact 100 Index, which was developed through a partnership between Rize, Forberry (the index administrator), and Sustainable Market Strategies (SMS), an independent ESG intelligence firm based in Canada.
Rize is actively involved in the design of its financial products and does not use off-the-self indexes. This requires Rize to have a strong internal team of analysts.
Consequently, LIFE ETF is driven by academics, climate experts and investment professionals, resulting in a strong investment strategy. LIFE ETF targets companies with operations aligned to the six environmental objectives set out in the EU Taxonomy for Sustainable Activities, a part of the EU’s Sustainable Finance Disclosure Regulation (SFDR). These objectives include:
- Climate change mitigation,
- Climate change adaptation
- Sustainable use and protection of water and marine resources
- Transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biodiversity and ecosystems.
Rize Environmental Impact is not limited to a single sector, country, or classification of assets, resulting in an ETF with broad and global reach. The main differential of LIFE ETF is that it is not dependent on ESG criteria. It is truly an impact fund, designed to promote sustainable businesses.
The index selects the 100 stocks with the highest Environmental Impact Scores, within a specific liquidity criteria. Reconstitution and rebalancing occur semi-annually.
Companies selected for the fund must derive at least 50% of their revenue from a relevant sustainable sub-sector to remain eligible for the index. As consequence, the sustainability ratings from MSCI and Morningstar for LIFE ETF are high, receiving an AA risk rating, which represents low sustainable risk.
When it comes to geographic distribution, the fund is 43% allocated in US-based stocks, 26% in European stocks and 13% in Asian and Latin American stocks. It has a strong focus on the industrial sector (55%), followed by 14% on public services, 13% on technology, 9% on raw materials and 6% on cyclic consumer goods. Manufacturers of renewable energy equipment represent 12% of LIFE ETF, only behind companies dedicated to providing energy efficiency solutions (19%).
LIFE ETF is classified at Article 9 under SFDR.
Article 9, also known as ‘products targeting sustainable investments’, covers products targeting bespoke sustainable investments and applies “… where a financial product has sustainable investment as its objective and an index has been designated as a reference benchmark.”
The Top 10 holdings of Rize Environmental Impact 100 UCITS ETF (LIFE)
|Company||Country||Industry||Allocation||ESG Risk Rating|
|Companhia de Saneamento Basico do Estado de Sao Paulo SABESP (SBSP3:BZ)||Brazil||Utilities||1.82%||32.0 (high)|
|São Martinho SA (SMTO3:BZ)||Brazil||Food|
|Brookfield Renewable Corp. (BEPC:CN)||United|
|Solaria Energía y Medio Ambiente, S.A. (SLR:SM)||Spain||Utilities||1.48%||21.3 (medium)|
|Azure Power Global Limited (AZRE:US)||India||Utilities||1.46%||19.4 (low)|
|Svenska Cellulosa AB SCA (SCAB:SS)||Sweden||Paper &|
|Acciona, S.A. (ANA:SM)||Spain||Utilities||1.37%||19.8 (low)|
|Klabin SA (KLBN11:BZ)||Brazil||Containers &|
|Meridian Energy Ltd. (MEL:NZ)||New|
|EDP Renováveis, S.A. (EDPR:PL)||Spain||Utilities||1.32%||15.1 (low)|
Is SABESP the ugly ducking among LIFE ETF top holdings?
SABESP is a Brazilian utility company, which focuses on water treatment services. At MSCI we can find a detailed infographic with more details about SABESP’s ESG ratings:
The main issue is the fact that SABESP implied temperature rise is 2.48 degrees, which is above the 2C climate target goals. Moreover, the company does not have a decarbonization target.
Is Rize Environmental Impact 100 UCITS ETF (LIFE) a Good Investment?
There is no doubt that the Rize Environmental Impact 100 UCITS ETF is an innovative ETF and a unique product that combines several of the themes dedicated to sustainability and the environment. They offer a comprehensive approach to sustainability with a thematic and long-term focused approach, promoting the green development of global markets.
Moreover, they are in line with the latest climate regulations, such as the EU Taxonomy and SFDR. Overall, the strategy pursued by the Rize Environmental Impact 100 UCITS ETF is modern, robust, and well-diversified, bringing positive environmental impact.
Not investment advice: The information provided on this website is intended for general information purposes only and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should conduct your due diligence and, if necessary, consult a qualified independent financial advisor before making any investment decision.
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