New Listing

Fidelity launches two active Paris-Aligned corporate bond ETFs

TER 0.20%

Theo Andrew

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Fidelity has expanded its active multi-factor fixed income range with the launch two Paris-Aligned Benchmark (PAB) ETFs, ETF Stream can reveal.

The Fidelity Sustainable EUR Corporate Bond Paris Aligned Multifactor UCITS ETF (FEIG) and the Fidelity Sustainable USD Corporate Bond Paris Aligned Multifactor UCITS ETF (FUIG) are listed on the London Stock Exchange and the Deutsche Boerse total expense ratio (TER) of 0.20%.

Listings on the Six Swiss Exchange and Euronext Milan are set to follow.

The ETFs are benchmarked against the Solactive USD Corporate IG PAB index and the Solactive Euro Corporate IG PAB index.

Fidelity said it will leverage its systematic fixed income team using a multi-factor approach in a bid to generate alpha.

The team will select the bonds from the issuers with the highest multi-factor scores while also considering transaction costs and valuation.

Both ETFs will align with the Paris Agreement which targets initial decarbonisation versus the core/equivalent benchmark of 50% and an additional decarbonisation target of 7%.

Companies that receive over 10% of their revenues from fossil fuel production, exploration, distribution and services will be excluded.

Other exclusions include companies generating over 50% of their revenues from electric power generation from fossil fuel sources, tobacco production, controversial weapons and UN Global Compact violators.

The ETFs are classified as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR).

Stefan Kuhn (pictured), head of ETF distribution for Europe at Fidelity, said: “Since launch in 2021, the Fidelity Sustainable Global Corporate Bond Multifactor UCITS ETF has proved popular with clients, utilising Fidelity’s active research platform and our sustainability expertise to identify best-in-class corporate bonds at an attractive price point.”

In November last year, the firm expanded its range of multi-factor range with the launch of the Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF (FGHY).

Last month, the group’s head of ETFs Nick King left the business to lead Dutch asset manager Robeco’s entrance into the European ETF market.

King spent eight years at Fidelity having joined in 2015 and prior to this spent nine years at BlackRock.

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