BlackRock has introduced four asset allocation ETFs on Cboe BZX Exchange catering to socially responsible investors looking for single-ticker solutions.

BlackRock’s new asset allocation ETFs are aimed at ESG-focused investors who favour a single-ticket solution.

Similar to BlackRock’s existing four asset allocation ETFs, which launched in 2008 and have since accumulated over $4 billion in assets, the new funds are tailored for different investor risk appetites ranging from ‘Conservative’ to ‘Aggressive’.

They are the iShares ESG Aware Conservative Allocation ETF (EAOK US), the iShares ESG Aware Moderate Allocation ETF (EAOM US), the iShares ESG Aware Growth Allocation ETF (EAOR US), and the iShares ESG Aware Aggressive Allocation ETF (EAOA US).

Carolyn Weinberg, Managing Director and Global Head of Product for iShares, said the funds were “designed to simplify the ESG investment process with single-ticker solutions.”

She added, “Our iShares ESG Aware Asset Allocation ETFs are designed with a spectrum of sustainable investors in mind, allowing each individual more flexibility and options to choose solutions that are appropriate for their risk tolerance and goals.”

The Conservative ETF targets a 30/70 equity to fixed income allocation, the Moderate ETF targets a 40/60 allocation, the Growth ETF targets a 60/40 allocation, and the Aggressive ETF targets an 80/20 allocation.

Each asset allocation ETF invests exclusively in a mix of four iShares equity ETFs and one fixed income ETF. All the underlying ETFs incorporate environmental, social, and governance (ESG) criteria.

The underlying equity ETFs provide exposure to US large- and mid-cap, US small-cap, global developed ex-North America, and emerging market stocks. They are the iShares ESG MSCI USA ETF (ESGU US), the iShares ESG MSCI USA Small-Cap ETF (ESML US), the iShares ESG MSCI EAFE ETF (ESGD US), and the iShares ESG MSCI Emerging Markets ETF (ESGE US).

Each of these ETFs tracks an ‘MSCI ESG Focus’ index that screens its respective universe to exclude tobacco and weapons companies as well as firms embroiled in severe ESG-related controversies.

The remaining constituents are then weighted using ratings from MSCI ESG Research that evaluates how well each company manages key ESG issues relative to industry peers. The approach seeks to maximize the index’s total ESG score while maintaining a tracking error of less than 50 basis points relative to the parent universe.

The sole underlying fixed income ETF – the iShares ESG US Aggregate Bond ETF (EAGG US) – provides ESG-screened exposure to the US dollar-denominated investment-grade bond market.

The fund is linked to the Bloomberg Barclays MSCI US Aggregate ESG Focus Index which is a variant of the well-known Bloomberg Barclays US Aggregate Bond Index. The parent index consists of Treasury securities, government agency bonds, mortgage-backed bonds, corporate bonds, and a small number of foreign bonds traded in US dollars.

The methodology is similar to the above equity indices. The approach uses the same business exclusions before weighting constituents in order to maximize the index’s ESG score while maintaining risk measures (option-adjusted duration, spread duration, active total risk, yield-to-worst, and sector weights) within certain parameters relative to the parent index.

Each asset allocation ETF comes with an expense ratio of 0.18% which includes the cost of the underlying ETFs.