Fidelity International has introduced its first fixed income ETFs in Europe with the launch of two actively managed bond strategies incorporating sustainability criteria.
The Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF provides exposure to bonds from corporate issuers globally, while the Fidelity Sustainable USD EM Bond UCITS ETF targets emerging market sovereign debt denominated in US dollars.
The ETFs, which are classified Article 81 under the EU Sustainable Finance Disclosure Regulation, have been rolled out across Europe with listings on London Stock Exchange, Deutsche Börse, and SIX Swiss Exchange.
They each come to market with $30 million in assets.
Nick King, Head of ETFs at Fidelity International, said: “I am delighted to expand our ETF range with the launch of our first fixed income ETFs. Incorporating sustainable investing principles has become the key priority for many of our clients globally and we can now offer access to our proprietary research capabilities across asset classes in a transparent, cost-effective structure.
“Combining the very best of Fidelity’s active research platform and sustainability expertise with best-in-class portfolio construction techniques, our Systematic Fixed Income can create low-cost portfolios tailored to our clients’ specific needs.
“I’m pleased we can now offer our ESG conscious investors truly differentiated, cost-effective, sustainable ETF solutions across asset classes.”
Global corporate
Security selection for the Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF is driven by Fidelity’s proprietary multifactor credit model combined with integrated sustainability criteria. Developed by the firm’s systematic fixed income team, the model seeks to identify bond issuers with the potential for enhanced idiosyncratic returns.
The quantitative process first considers a variety of sentiment, valuation, fundamental, and ESG scores to deliver an overall multifactor score for each bond issuer. It then aims to generate alpha by selecting the most attractive bonds (based on transaction costs and valuation metrics) from those issuers with the highest multifactor scores.
The fund has an expense ratio of 0.25%. Income is distributed on a quarterly basis.
It has been listed on the LSE in US dollars (FSMF LN) and pound sterling (FSMG LN), on Xetra in euros (FSCM GY), and on SIX in US dollars (FSMF SW) and Swiss francs (FSMFCHF SW). It is also available on the LSE through a GBP-hedged share class (FSMP LN).
Emerging markets
The Fidelity Sustainable USD EM Bond UCITS ETF, meanwhile, targets an enhanced weighting to countries most favoured by Fidelity’s Emerging Market debt factors heatmap and an improved sustainability footprint based on proprietary and external ESG ratings.
The fund comes with an expense ratio of 0.45%. Income is also distributed on a quarterly basis.
It has been listed on the LSE in US dollars (FSEM LN) and pound sterling (FSED LN), on Xetra in euros (FESD GY), and on SIX in US dollars (FSEM SW) and Swiss francs (FSEMCHF SW). It is also available on the LSE through a GBP-hedged share class (FEMP LN).