UBS Asset Management has launched a new ETF in Europe providing broad exposure to green bonds, diversified across currencies and fixed income sectors worldwide, while incorporating additional sustainability considerations.
Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management.
The UBS (Lux) Fund Solutions – Global Green Bond ESG 1–10 UCITS ETF has been listed on SIX Swiss Exchange (GREENE SW), Borsa Italiana (GGB IM), and Deutsche Börse Xetra (CHSA GY) in US dollars.
The fund is also available to trade through euro-denominated, currency-hedged share classes.
Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management, said: “Investors are increasingly seeking innovative solutions to help meet a range of climate and sustainability needs. This ETF enables investors to gain global exposure to green bonds with environmental benefits – while also considering the ESG profile of the underlying issuers.”
Methodology
The ETF is linked to the Bloomberg MSCI Global Green Bond 1-10 Year Sustainability Select Index which consists of Treasury, corporate, government-related, and securitized bonds with investment-grade credit ratings.
Eligible bonds may be denominated in any of 30 currencies and must have a remaining maturity between one and ten years.
To qualify for inclusion in the index, bonds must meet the green bond principles endorsed by the International Capital Market Association in 2014. These principles stipulate commitments on the use of proceeds, which must be linked to alternative energy, energy efficiency, pollution prevention and control, sustainable water, green buildings, or climate adaption; on processes pertaining to green project evaluation and selection; on the management of proceeds, including a defined mechanism to ring-fence the net proceeds, and to the ongoing reporting of the environmental performance of the use of proceeds.
The index’s additional ESG requirements include removing issuers involved with controversial weapons, civilian firearms, thermal coal, tobacco, alcohol, oil sands, and Arctic oil, companies embroiled in ESG-related controversies, and firms with MSCI ESG ratings below ‘BBB’ (average).
Bonds are weighted by market value in the index while limiting the weight of any single issuer to 3%.
The ETF comes with an expense ratio of 0.20% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
UBS AM has notably expanded its offering of sustainability-minded ETFs recently. Earlier this month, the firm began rolling out its new ‘ESG Elite Dividend Aristocrats’ ETF suite which targets companies that offer sustainable dividends and meet strict ESG criteria. Last month, the firm debuted the UBS ETF – CMCI Commodity Transition SF UCITS ETF, a broad commodities ETF that tilts weights in favour of those commodities exhibiting more positive impacts on society and the environment.