Effective April 1, 2021, a new investment option will join the UC Retirement Savings Program fund menu: the UC Global Equity ex Fossil Fuel Fund.
If you’re looking to invest in a greener economy, explore the new UC Global Equity ex Fossil Fuel Fund. This fund is designed to invest in domestic and international companies that do not own fossil fuel reserves or sell tobacco products.
This fund may appeal to you if you do not wish to own companies with fossil fuel reserves—either because of your values or for other reasons—yet want to retain broad stock market exposures and their investment returns. Plus, the fund gives you the opportunity to invest in the same stock exposure that is used for the index holdings of the UC Pension and Endowment!
How will the fund invest?
The UC Global Equity ex Fossil Fuel Fund is an index fund, aiming to track the composition and performance of an equity market index—in this case the MSCI ACWI IMI ex Fossil Fuels ex Tobacco Index—by holding essentially all stock constituents at the same weight.
The index measures the performance of approximately 8,000 large, mid and small-cap stocks across the US, developed and emerging markets.
Companies are excluded if they own “proved and probable” reserves of oil, gas, or thermal coal, or are considered to be in the tobacco industry. The fund excludes more than 300 fossil fuel reserve-owning companies because, in the determination of the Chief Investment Officer, these companies pose material risks that outweigh their potential returns. The fund may exclude other companies for similar reasons.
What are the fund's management fees?
Index funds tend to have lower fees than funds that are “actively” managed—that is, funds that try to outperform market returns. On your behalf, UC has negotiated razor-thin management fees: The UC Global Equity ex Fossil Fuel Fund’s expense ratio will be 0.01%.
Who might consider the UC Global Equity ex Fossil Fuel Fund?
If you are looking for long-term capital appreciation from a globally diversified mix of stocks, the Global Equity Index ex Fossil Fuel fund may be appropriate for you—especially if you prefer more climate-conscious investments.
Since the fund’s risk is expected to remain steady over time, it may not be appropriate for investors with shorter time horizons or who are nearing retirement.