Lyxor has rolled out a US dollar-denominated share class for its Lyxor Green Bond (DR) UCITS ETF on London Stock Exchange.
Investors can now trade the Lyxor Green Bond (DR) UCITS ETF on London Stock Exchange in US dollars and pound sterling.
The new share class trades under the ticker CLMU LN and is intended for investors with US dollar liquidity who wish to gain access to the investment-grade green bond market.
Green bonds are debt securities issued by sovereign, supranational or corporate entities that specifically allocate the proceeds raised through issuance to projects or ventures enhancing environmental sustainability.
They provide an instrument for environmentally conscious investors to gain fixed income exposure without comprising on their green credentials.
The Lyxor ETF, which first launched in March 2017, tracks the Solactive Green Bond EUR USD IG Index which harnesses the data capabilities of Climate Bonds Initiative (CBI), an investor-focused not-for-profit organization working to mobilize bond markets for climate change solutions.
The index universe comprises all USD and EUR-denominated investment-grade bonds that have been defined as green bonds by the Climate Bond Initiative. Floating-rate notes, inflation-linked bonds, convertible bonds, and municipal bonds are excluded from selection.
According to the CBI’s Green Bond Principles, green bonds are “instruments in which the proceeds will be exclusively applied (either by specifying Use of Proceeds, Direct Project Exposure, or Securitization) towards new and existing Green Projects – defined here as projects and activities that promote climate or other environmental sustainability purposes.”
The organization’s Climate Bond Standards take these principles a step further by creating a formal certification framework, which ensures that proceeds are only used for low-carbon, and climate enhancing projects, and that ongoing transparency and reporting requirements are met.
To be included in the index, bonds must have at least €300m or $300m outstanding for bonds denominated in euros or US dollars, respectively, with time to maturity of at least 12 months.
Index components are weighted by market value outstanding with corporate issuers and government issuers capped at 5% and 10% respectively.
The physically-replicated ETF charges total fees of 0.25%and houses assets under management across all its share classes of around $130m.
The ETF is also available to trade in pound sterling on LSE (CLIM LN) as well as in euros on Euronext Paris (CLIM FP) and Borsa Italiana (CLIM IM) and in Swiss francs on BX Swiss (CLIM BW).