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BlackRock launches 'Europe's first' ESG high-yield bond ETFs


BlackRock offer "larger toolbox" to sustainable investors.

BlackRock offer “larger toolbox” to sustainable investors.

BlackRock, in collaboration with Dutch insurer a.s.r., has launched two ESG high-yield bond UCITS ETFs, bolstering its ESG offering.

The iShares € High Yield Corp Bond ESG UCITS ETF (EHYD) and the iShares $ High Yield Corp Bond ESG UCITS ETF (DHYD) plan to offer investors a “larger toolbox” to reflect sustainability objectives.

BlackRock cited a “confluence of factors” in Europe including “country-level legislation, growing societal awareness, better data”, an “evolving demographic” among the investor community and global bond ETF assets reaching $1trn in June 2019 as the drivers of ESG integration.

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The firm has predicted global bond ETF assets will “double by 2024”, with $50bn predicted to be in EMEA fixed income ESG ETFs.

The funds will enable “a more sustainable high yield exposure” through companies with the “strongest commitment” to ESG, as well as excluding those involved in “controversial” business activities.

EHYD will track the Bloomberg Barclays MSCI Euro Corporate High Yield SRI and Sustainable BB+ Bond Index, while DHYD will track the Bloomberg Barclays MSCI US Corporate High Yield SRI and Sustainable BB+ Bond Index.

They will have a total expense ratio of 0.5%, “the same as corresponding iShares ETFs in € and $ high yield with no ESG screens”.

Meaghan Muldoon, head of sustainable investing EMEA at BlackRock, said: “As evidence increasingly shows that sustainability-related factors can help investors build more resilient portfolios, we are moving into an era where sustainable investing will be the standard way to invest.

“Our commitment at BlackRock is to provide the choice of products that allow investors at different stages of this journey to allocate to different markets efficiently and without paying a premium.

“Against a backdrop of a search for yield, and enhanced coverage across the credit and geographic spectrum, more and more investors can now invest in fixed income strategies while meeting their sustainability goals.”

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Brett Olson, head of iShares fixed income EMEA, added: “While the conversation around sustainability started out in equities, innovation in ESG bond indices is picking up pace and with it the ability to build ESG-centred multi-asset portfolios.

“In tandem, bond ETFs themselves are becoming ubiquitous as efficient tools for all types of investors. These two factors make this asset class ripe for future growth.



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