BlackRock has expanded its fixed income ETF roster with the launch of three ETFs targeting climate, green bonds, and emerging market debt.
The iShares € Green Bond UCITS ETF (GRON) is listed on the Deutsche Boerse with a total expense ratio (TER) of 0.20% while the iShares Global Govt Bond Climate UCITS ETF (CGGD) and iShares J.P. Morgan $ EM Investment Grade Bond UCITS ETF (IGEM) are listed on Euronext Paris with TERs of 0.20% and 0.30%, respectively.
GRON tracks the Bloomberg Barclays MSCI Euro Green Bond SRI including Nuclear Power index which offers exposure to more than 300 euro-denominated investment-grade green bonds covering four sectors.
Bonds included in the strategy aim to raise capital for projects with environmental benefits, including renewable energy, green buildings, wastewater management, energy efficiency, and public transport.
GRON also excludes any involved in controversial and nuclear weapons, and those associated with what it deems ESG controversies.
Meanwhile, CGGD tracks the FTSE Advanced Climate Risk Adjusted World Government index. Taking the FTSE World Government Bond Index as its starting point, it performs a forward-looking assessment of climate risk, covering the physical risk, transition risk, and resiliency of different sovereigns. Based on this assessment, the index then weights favourably towards better-performing geographies.
CGGD is an expansion of the firm’s first climate bond ETF, the iShares € Govt Bond Climate UCITS ETF (SECD), which was launched in October 2020 and focuses on companies in the European Monetary Union.
GRON is categorised as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), while CGGD is categorised as Article 8.
Brett Olson (pictured), head of fixed income iShares in EMEA at BlackRock, commented: “The AUM of our iShares EMEA fixed income range has grown by around 29% in the past year, as investors are increasingly using them as transparent, efficient building blocks to access the bond market sustainably.”
IGEM offers exposure to US dollar-denominated government bonds issued by investment grade rated emerging market countries.
BlackRock said IGEM will help investors seeking increased granularity in emerging markets as the role of traditional fixed income continues to be challenged during 2021.
Olson added: “Emerging markets is one of the few asset classes offering attractive yield and presenting relative value versus other asset classes in our view.”