Fidelity has made its first inroads into fixed income ETFs by launching two active ESG strategies.
The Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF (FSMF) and Fidelity Sustainable USD EM Bond UCITS ETF (FSEM) are listed on the London Stock Exchange, Deutsche Boerse, and SIX Swiss Exchange with ongoing charges figures (OCFs) of 0.25% and 0.45%, respectively.
FSMF uses a mixture of integrated sustainability criteria and Fidelity’s proprietary multi-factor credit model to offer investors exposure to an actively-managed basket of sustainable global corporate bonds.
The company’s model aims to collate scores on sentiment, valuation, fundamentals, and ESG, and then seeks to generate alpha by selecting the most attractive bonds from issuers with the highest multi-factor scores.
Meanwhile, FSEM provides investors with active sustainable emerging market sovereign debt exposure. Countries are weighted favourably based on a combination of the company’s emerging market debt factors heatmap, its proprietary sustainability ratings, and external ESG ratings.
Both new ETFs are classified Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) and are at least 70% invested in the securities of companies that maintain what Fidelity deems to be sustainable characteristics.
Nick King (pictured), head of ETFs at Fidelity International, commented: “Incorporating sustainable investing principles has become the key priority for many of our clients globally and we can now offer access to our proprietary research capabilities across asset classes in a transparent, cost effective structure.”
Sustainable fixed income ETFs have been in the spotlight in recent months. There have been several launches over the past year, not least the iShares € Green Bond UCITS ETF (GRON) and iShares Global Govt Bond Climate UCITS ETF (CGGD) which were also launched today (29 March).