ESG in ETFs: Which investment grade bond funds made it to the top?

Which ESG ETFs outperformed this month?

Which ESG ETFs outperformed this month?

In our fifth instalment of the series, we take a step away from stocks to focus on bond ETFs, delving deep into the Developed Investment Grade Bonds sector to identify the five ETFs with the highest ethical, sustainable and governance (ESG) ratings.

As previously, we do this with the help of TrackInsight’s ESG tool, which it revealed in April, designed to give investors the capacity to assess the composition of a product under a socially responsible scope.

The tool, powered by Conser, analyses ETF holdings via a “consensus-driven” technology, which gives insight into the ESG consensus on each individual holding, as well as “major controversies and breaches of international norms”. To gain this score, the tool assesses multiple ESG sources, such as implicit evaluations of ratings agencies and sustainable asset managers.

Due to the size of the investment universe, all five of the top-rated funds in the Developed Investment Grade Bonds sector gained the A+ rating, the best offered by the tool.

What’s more, most of the funds on this list have zero exposure to fossil fuels or any other controversial industries, such as alcohol, gambling or tobacco.

In the last article in the series we looked at EM equity ETFs

However, one fund – the UBS ETF – Bloomberg Barclays MSCI Euro Area Liquid Corporates Sustainable UCITS ETF – holds 4.3% in fossil fuels, though none of this is in coal, while the fund also invests 4.8% in green bonds, 0.6% in clean tech and 1.4% in water resources.

Each week, we reveal the top ESG-rated ETFs in a different sector based on data from TrackInsight and Conser. Further information and a detailed breakdown of the ESG characteristics of more than 3,000 ETFs can be found on the TrackInsight website.



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