Industry Updates

LGIM closes green bond ETF on ‘changing’ investor demand

GBND has €6.4m AUM

Theo Andrew

a metal padlock on a green metal gate

Legal & General Investment Management (LGIM) is closing its green bond ETF following “changing investor demand and market environment”.

In a shareholder notice, LGIM said it would be shutting its L&G ESG Green Bond UCITS ETF (GBND) on 19 May in the “long-term interests of the shareholders”.

Having launched in February 2021, GBND has amassed €6.4m assets under management in a little over two years.

Commenting on the closure, an LGIM spokesperson said: “We can confirm that LGIM will be closing GBND, effective 19 May.

“While assets under management in the fixed income ETFs in the LGIM range have continued to grow over the past few years, the sub-fund closure follows a detailed review of our investment proposition that considered changing investor preferences and market environment.”

The ETF, which tracks the JP Morgan ESG Green Bond Focus index, offers exposure to corporate and local government green bonds across emerging and developed markets and has returned -19.65% since inception.

GBND is labelled Article 9 under the Sustainable Finance Disclosure Regulation (SFDR) and has a total expense ratio (TER) of 0.25%.

Despite the GBND’s low AUM, other European green bond ETFs have seen significant inflows over the past 12 months, with the $258m Franklin Liberty Euro Green Bond UCITS ETF (FLRG) and the $180m Lyxor Euro Government Green Bond UCITS ETF (XGBE) recording inflows of $166m and $133m, respectively, according to data from ETFLogic.

Last month, the UK asset manager said it would expand its ETF range and intensify its push into the German retail market, eyeing the launch of a co-branded multi-factor ETF with investment firm Gerd Kommer Invest.

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