Fidelity has expanded its range of multi-factor Paris-aligned climate strategies with the launch of a high yield bond ETF.
The Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF (FGHY) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.35%.
FGHY is an actively-managed ETF that offers exposure to a basket of high yield bonds aligned with the Paris Agreement goal of limiting global emissions to 1.5°C.
It is benchmarked against the Solactive Paris Aligned Global Corporate High Yield USD index.
The ETF incorporates criteria of the European Union’s Paris-aligned Benchmark (PAB) which targets 50% lower emission intensity versus the parent benchmark as well as an average decarbonisation rate of 7% per year.
Companies are excluded if they are exposed to United Nations Global Compact controversies or have involvement in weapons, thermal coal, oil sands, arctic oil and gas or tobacco.
The ETF is categorised as 'dark green' Article 9 under the Sustainable Finance Disclosure Regulation.
FGHY will also use Fidelity’s in-house multi-factor credit model – which identifies issuers scoring well on sentiment, valuation, fundamentals and ESG – in an attempt to outperform.
Nick King (pictured), head of ETFs at Fidelity International, commented: “Reducing climate impact and supporting the Paris Agreement set out in 2015 are of the utmost importance for building a sustainable future, and the launch of this new ETF reaffirms Fidelity’s ambition in sustainable investing.
“We are convinced this ETF will provide clients the opportunity to meet their financial goals and their climate objectives.”
Fidelity entered the fixed-income ETF space in Europe last March with the Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF (FSMF) and in August, proposed changing the product’s benchmark to one incorporating PAB criteria.