Amundi has introduced a new fixed income ETF in Europe providing socially responsible exposure to corporate bonds at the front end of the yield curve from global issuers with robust credit ratings.
The ETF employs a robust socially responsible methodology, incorporating comprehensive screenings based on business activity, controversy, and ESG ratings.
The Amundi Global Corporate SRI 1-5Y Highest Rated UCITS ETF has been listed on Deutsche Börse Xetra in euros (Ticker: GCRE GY) and US dollars (GCRU GY).
The fund has come to market with $100 million in assets courtesy of an initial investment from the Fondo Latinoamericano de Reservas (FLAR – the Latin American Reserve Fund).
The ETF is linked to the Bloomberg MSCI Global Corporate A+ ESG Sustainability SRI 1-5 Year Index which includes corporate bonds denominated in a broad range of currencies as long as they satisfy minimum par amount outstanding thresholds and have a remaining time until maturity between one and five years. Only issuers with credit ratings of at least ‘A-‘ will be considered eligible.
The index’s socially responsible methodology screens out issuers embroiled in severe ESG-related controversies as well as those with notable business operations in controversial industries such as adult entertainment, alcohol, gambling, tobacco, weapons, nuclear power, thermal coal, fossil fuels, and genetically modified organisms.
The remaining issuers are then assigned ESG scores based on an analysis conducted by MSCI ESG Research. Corporations must have a rating of BBB (average) or higher to remain in the index.
Constituents that are selected for the index are weighted by market value outstanding.
The ETF comes with an expense ratio of 0.18% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
According to Amundi, the ETF was designed to assist central banks in achieving their responsible investment objectives while simultaneously addressing requirements for transparency, diversification, performance, and low tracking error.
Additionally, the firm notes that investment-grade corporate bonds have high eligibility among institutional clients and are typically well-suited to the responsible investment approach.
Gaëtan Delculee, Global Head of Digital Distribution and ETF Sales at Amundi, commented: “Our collaboration with FLAR showcases our client-centric approach and ability to leverage our ETF expertise and leadership in responsible investing to accompany institutions in their ESG journey. We believe central banks have a key role in shaping sustainable frameworks, and we are proud to partner with FLAR to develop an innovative ESG solution adapted to their needs.”
Fidel Jaramillo, Secretary General at FLAR, added: “Our commitment to sustainable investments is
reflected in our continuous efforts to align with industry best practices and regional cooperation. By
collaborating with our peers in the region and the industry, we are dedicated to driving forward
responsible investment strategies that promote transparency, diversification, and performance. In this very valuable collaboration with Amundi, FLAR has taken the initiative to become the seed investor in this ESG-oriented ETF, addressing critical market gaps and championing responsible investing. By doing so, FLAR contributes to the creation of a public good for the central bank community.”