BlackRock has launched Europe’s first ETF that offers exposure to the ESG version of Bloomberg’s global aggregate bond index.
The iShares Global Aggregate Bond ESG UCITS ETF (AGGE) is listed on Euronext and Deutsche Boerse with a total expense ratio (TER) of 0.10%, the same fee as the firm's non-ESG equivalent, the iShares Core Global Aggregate Bond UCITS ETF (AGGG).
AGGE tracks the Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI index which is a basket of global bonds selected from across 70 countries and in over 30 currencies.
To be included in the index, issuers must have an MSCI ESG rating higher than BBB and must not be involved in controversial weapons, civilian firearms, tobacco, adult entertainment, alcohol, gambling, nuclear power, genetically modified organisms, oil sands or thermal coal.
The index also looks to have a positive ESG impact by holding at least 10% of securities classified as green bonds.
Overall, the index offers exposure to 20,000 bonds from across 3,000 issuers versus 27,000 for the parent index.
Rebalancing monthly, AGGE employs a sampling methodology to track the index meaning not all 20,000 securities are included in the basket.
Currently, AGGE has 36.4% in the US, 13.1% in Japan, 7% in China through the iShares China CNY Bond UCITS ETF (CNYB) and 6.6% in France.
AGGE has been classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).
Commenting on the launch, Brett Olson, head of fixed income iShares in EMEA at BlackRock, said: “As the shift to sustainable investing continues to accelerate, we have seen strong demand for a sustainable global aggregate exposure.
“Many investors transitioning their fixed income allocations are embracing indexing due to the diversification, transparency and efficiency that ETFs provide.
“We believe AGGE meets investors’ needs for a diversified global fixed income investment grade-rated building block while also offering improved sustainable characteristics.”