Purpose launches software ETF in Europe

Toronto-based Purpose Investments Inc. is launching an enterprise software ETF that will list on the London Stock Exchange on Friday.

Billed as the first pure-play ETF of its kind, the Purpose Enterprise Software ESG-S UCITS ETF is being offered through Purpose’s partnership with HANetf, an independent European ETF specialist.

The ETF will track the Solactive Purpose Enterprise Software ESG Screened Index NTR, which returned 50.3% for the 12 months ended June 30 and 473.3% for the five years ended June 30, according to data from HANetf and Bloomberg.

The ETF will provide exposure to software-as-a-service companies such as Adobe, Shopify and Twitter. The underlying index includes an ESG screen, which excludes companies with exposure to controversial weapons and fossil fuels, according to a release from Purpose.

“Software companies have highly scalable recurring revenue that is resilient in any market environment. These businesses have high gross margins, strong free cash flow, and bulletproof balance sheets,” said Nicholas Mersch, portfolio manager with Purpose, in the release.

The ETF’s total expense ratio is 0.59%. It will begin trading on Deutsche Borse Xetra on Aug. 3 and on Borsa Italiana later in the month.

In June, Purpose debuted a carbon-offset ETF in Europe through its partnership with HANetf.

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