New Listing

Invesco launches global corporate bond ESG ETF

GCBE captures bonds issued by companies in developed markets

Jamie Gordon

ESG finance

Invesco has launched a global corporate bond ETF incorporating ESG screening criteria, ETF Stream can reveal.

The Invesco Global Corporate Bond ESG UCITS ETF (GCBE) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.15%.

GCBE physically replicates the Bloomberg MSCI Global Liquid Corporate ESG Weighted SRI Sustainable Bond index which offers exposure to bond issuances from companies in developed markets with strong ESG profiles.

Companies are capped at 5% of the benchmark’s weight and must be investment grade to be included.

Eligible bonds must be denominated in US dollars, euros, sterling or Canadian dollars and have at least a year until maturity.

The index excludes issuers according to Bloomberg MSCI SRI screening criteria and those involved in firearms or nuclear, conventional or biochemical weapons.

Issuers with a ‘red’ MSCI ESG controversy score or those not covered by MSCI ESG controversy research are also excluded.

Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, said: “Investors have been using ETFs to gain exposure to fixed income markets increasingly over the past 5 years.

“One of the main drivers of this acceleration in demand has been the launch of fixed income ETFs targeting specific ESG-related objectives, particularly those aiming to provide an uplift in ESG characteristics while maintaining a similar risk and return profile to a non-ESG benchmark.”

Paul Syms, head of EMEA fixed income and commodity ETF product management at Invesco, added: “[GCBE] may be attractive for ESG-minded investors looking to take advantage of today’s high bond yields and potential for a favourable rate environment going forward, without taking on individual currency risk or deviating too much from the characteristics of the standard benchmark.”

The launch comes after the firm tightened metrics on five climate ETFs to reduce their physical and transition risks last November.

A month earlier, the issuer became the latest to increase the minimum sustainable investment threshold on its Paris-Aligned Benchmark (PAB) ETFs following rule clarifications by the European Commission.

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