State Street Global Advisors has launched two ESG fixed income ETFs, offering investors access to European and US investment grade credit.
The SPDR Bloomberg SASB Euro Corporate ESG UCITS ETF (SPPR GY) is available from today (19 October), while the SPDR Bloomberg SASB U.S. Corporate ESG UCITS ETF (SPPU GY) will launch on 26 October. Both funds will be available to investors for a total expense ratio of 0.15%.
SPPR GY and SPPU GY seek to provide investors total return, incorporating both capital and income returns, and will track the euro and US iterations of the Bloomberg SASB Corporate ESG Ex-Controversies Select indices.
The indices utilise an exclusionary screen, beginning with the Bloomberg Barclays Corporate indices and excluding any issuers that are "tagged" with extreme event controversies, controversial weapons, UNGC violations, civilian firearms, thermal coal extraction and tobacco production.
The remaining securities are then reweighted to maximise the ESG score of the portfolio, while maintaining similar risk and return characteristics to the parent index.
Antoine Lesné, head of research and strategy for SPDR, EMEA, said: "With the launch of our two new investment grade ESG focused ETFs, we are providing investors with a new and innovative approach to positively screen in a transparent and 'best in class' way.
"By also providing a similar risk/return profile to the two broad parent indices, investors can use our new ETFs to complement their core asset allocation or use them as replacement strategies."
Matteo Andreetto, head of SPDR, EMEA, added: "Trends that have been bubbling under the surface for the last decade have now come to a head, making ESG a significant and central building block of a portfolio.
"In addition to this, large-scale wealth transfers from Boomers to their children, and a greater emphasis on living according to values, has encouraged ESG adoption.
"The investment industry is responding well to these trends, providing investors with more solutions to satisfy a growing appetite for ESG factors in portfolios."
This article was first published by our sister title Investment Week