(Boursier.com) — Invesco is launching an ETF exposed to global corporate bonds that aims to increase exposure to Investment Grade issuers that demonstrate a strong ESG profile. The Invesco Global Corporate Bond ESG UCITS ETF will be passively managed and invest in securities of private issuers from developed markets, with weightings adjusted according to certain ESG criteria.
Thibaud de Cherisey, Head of ETF Distribution EMEA at Invesco, said: “Over the last 5 years, investors have increasingly used ETFs to gain exposure to the bond markets. One of the main drivers of this Accelerating demand has been the launch of bond ETFs targeting specific ESG objectives, particularly those aimed at providing better integration of ESG criteria while maintaining a risk and return profile similar to that of a non-ESG benchmark.”
The new Invesco ETF will aim to track, up and down, the Bloomberg MSCI Global Liquid Corporate ESG Weighted SRI Sustainable Bond Index, which measures the market for fixed-rate taxable bonds issued by global corporations in developed countries. To be eligible, issuers must have an investment grade credit rating and the principal and interest of the securities must be denominated in USD, EUR, GBP or CAD. The list of eligible currencies will be reviewed each year.
Manual
The ESG objective will be achieved through a combination of exclusions and ratings. Issuers will be removed from the index if they are involved in certain commercial activities, have an MSCI ESG rating below BBB, or have faced very serious controversies regarding ESG issues in the last three years. The index then uses MSCI ESG ratings to vary allocations relative to their market value in the Global Aggregate Corporate Index, while limiting the market value weighting of issuers to a cap of 5%. The index is rebalanced every month.
Paul Syms, Head of EMEA Bond and Commodities ETF Product Management at Invesco, adds: “The new Invesco ETF follows the same investment methodology as our IG Corporate Bond ESG ETFs in EUR, GBP and USD, but on a multi-currency basis It could suit ESG-sensitive investors looking to take advantage of current high bond yields and the potential of the upcoming favorable rate environment, without taking on individual currency risk or straying too far. characteristics of the standard benchmark index.”
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