Industry Updates

JP Morgan AM adds ESG filter to three corporate bond ETFs

At least 51% of the assets will be invested in issuers with positive ESG scores

Theo Andrew


JP Morgan Asset Management (JPMAM) has added an ESG filter to three more corporate bond ETFs changing their name in the process.

Effective 1 March, the JPMorgan EUR Corporate Bond Research Enhanced Index UCITS ETF (JREB), the JPMorgan EUR Corporate Bond 1-5 yr Research Enhanced Index UCITS ETF (JR15) and the JPMorgan USD Corporate Research Enhanced Index UCITS ETF (JRUB) will invest at least 51% of their assets through issuers with positive ESG characteristics.

As a result, ESG will be added to the name of each ETF while the ticker and total expense ratio (TER) will remain unchanged.

The ETFs will continue to invest 67% of its assets in investment grade euro and US dollar corporate debt securities with a “value and norms-based screening” filter applied.

As a result, the ETFs will exclude issuers involved in the manufacturing of controversial weapons, thermal coal and tobacco while issuers will be assessed against principles in the UN Global Compact.

It added they will apply “maximum percentage thresholds” for industries that make a certain amount of turnover from production or distribution of certain sectors.

For example, issuers that make over 10% of their turnover from conventional weapons, 5% from tobacco production, 30% from thermal coal and 2% from connections to the nuclear weapons industry.

In a shareholder note, JPMAM said: “The board believes that enhancing the sub-funds’ disclosure to reflect the promotion of ESG characteristics within the portfolio is in the best interests of investors as it may offer better prospects for growth as demand for sustainable products continues to grow.”

It follows similar changes to three ultra-short duration bond ETFs earlier this month.

From 21 February, The JPMorgan USD Ultra-Short Income UCITS ETF (JPST), the JPMorgan EUR Ultra-Short Income UCITS ETF (JEST) and the JPMorgan GBP Ultra-Short Income UCITS ETF (JGST) will invest through the same ESG characteristics.

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