Amundi is certainly making waves in the European ETF space with its
signalling a further push and the launch of a new short-dated corporate bond environmental, social and governance (ESG) product.
The Amundi Index Euro Corporate SRI 0-3Y – UCITS ETF (ECRP3) is listed on Euronext Paris with a total expense ratio (TER) of 0.12%. Tracking the Bloomberg Barclays MSCI Euro Corporate ESG BB+ Sustainability SRI 0-3 Year index, ECRP3 offers investors exposure to euro-denominated corporate bonds with a maturity between 0 and 3 years from issuers with strong ESG ratings.
Issuers involved in alcohol, tobacco, military weapons, civilian firearms, gambling, adult entertainment, GMO and nuclear power are excluded.
What the company says:
Fannie Wurtz, head of ETF, indexing and smart beta at Amundi, commented: "This launch demonstrates our commitment to meet the growing investor demand for passive solutions with ESG filters at very competitive prices. Amundi’s range of low carbon and SRI equity and fixed income ETFs started in 2015 which now totals seven products."
What the panel says:
Jose Garcia Zarate, Morningstar
ESG is all the rage these days and all ETF providers are looking at expanding their suite of ESG-themed products. I believe this is the third Amundi ESG fixed-income ETF and unsurprisingly so they have focused on the corporate bond market, which is where ESG filters are easily applied and where there is a growing range of ESG benchmarks ready to be used by index-tracking vehicles such as ETFs.
There certainly is growing demand amongst investors for ESG solutions in their portfolios and so I can only expect this to be the first of many more ESG fixed income ETFs from Amundi to come to the market. In the current environment where many eurozone government bond markets sport negative yields, particularly in short maturities, the 1-3y focus of this ETF should appeal to investors seeking yield in corporate bonds while minimising risk.
Rumi Mahmood, Nutmeg
The fund’s index includes companies with MSCI ESG ratings of BB or higher and excludes companies that are involved in business activities inconsistent with values-based criteria including controversial weapons, alcohol and tobacco. Sector exposures are aligned with the parent index. At 12 basis points the fund is priced competitively making it the cheapest 0-3 Euro corporates product listed in Europe. It is interesting to note that it is cheaper than non-ESG equivalents and almost half the cost of the largest 0-3 Euro corporate fund in Europe.
The incumbent comparable product in the ESG/SRI space is the London-listed iShares Euro Corp Bond 0-3 SRI ETF at 15 bps, however it tracks a stricter, more exclusionary SRI index that only includes issuers rated BBB or higher. The fixed-income side of the ESG investing toolkit via ETFs remains sparse relative to equity and products such as Amundi’s add much needed variety for more targeted exposures.
Sam Dickens, IG Portfolios
Amundi’s ECRP3 will directly compete with iShares for European investors’ assets in the ESG, short-dated corporates space. iShares launched the German-listed QDVL back in 2016. While UK investors can get the same exposure through the London-listed SUSE, both have a slightly more expensive expense ratio of 0.15%.
Further innovation in the ESG fixed-income space is welcomed, given that the growing number of socially-conscious investors may find themselves constrained when attempting to construct a fully sustainable, yet still optimal multi-asset portfolio.
Ray Backreedy, Sparrows Capital
Amundi’s foray into the ESG corporate fixed income space is a timely and welcome addition as it offers competition and diversity to the existing Ishares and UBS offerings. All three managers track an MSCI ESG overlay on Bloomberg Barclays bond indices. Amundi’s direct competition is the iShares Euro Corporate Bond 0-3yr ESG UCITS ETF, consists of ESG (environmental, social and governance) screened corporate bonds.
The Amundi challenger carries an OCF of 0.12% versus iShares at 0.15% compared with Amundis’ 0.12%. The iShares fund boasts AUM of over €600m while it is unclear how much initial investment Amundi enjoys. Amundi’s launch of fund and ETF under the same umbrella structure is a greatly overdue innovation which opens up easy access to the retail fund platform markets which have been slow to adapt to the emergence of ETFs.