BlackRock appears set to be the first European ETF issuer to offer an ESG-screened bond fund targetting the USD corporate high-yield sector.

The fund screens the broad USD high-yield corporate bond market to exclude issuers with non-ESG-compliant business activities.
The iShares USD High Yield Corp Bond ESG UCITS ETF is scheduled to debut next week on Euronext Amsterdam (DHYE NA) and London Stock Exchange (DHYA LN).
The ETF will track the Bloomberg Barclays MSCI USD Corporate High Yield Sustainable BB+ SRI Bond Index, an index devised jointly by Bloomberg and MSCI.
The index selects its constituents from the pool of bonds that make up the Bloomberg Barclays US Corporate High Yield Index.
This parent index includes fixed-rate, US dollar-denominated, taxable corporate bonds that have been issued in the past five years and have a remaining maturity of at least one year and an outstanding face value of $500 million or more.
To be eligible for inclusion, securities must be classified as high yield by Moody’s, Fitch, and S&P.
The universe is screened to exclude issuers with substantial revenue derived from controversial sources such as alcohol, tobacco, weapons, nuclear power, and genetically modified organisms (GMOs), among others.
The remaining securities are then weighted by market value outstanding. The constituent list is monitored such that if any issuer becomes embroiled in major ESG controversy it is promptly excluded.
The ETF will come with an expense ratio of 0.50%, matching the fee on BlackRock’s non-ESG-screened high yield ETF, the iShares $ High Yield Corp Bond UCITS ETF (IHYA US). This fund is linked to the Markit iBoxx USD Liquid High Yield Capped Index and houses approximately $5.4 billion in assets under management.