State Street Global Advisors (SSGA) has expanded its environmental, social and governance (ESG) offering with the launch of two fixed income ETFs.
The SPDR Bloomberg SASB Euro Corporate ESG UCITS ETF (SPPR) is listed on Xetra with a total expense ratio (TER) of 0.15%.
The SPDR Bloomberg SASB US Corporate ESG UCITS ETF (SPPU) is set to list on Xetra on 26 October also with a TER of 0.15%.
SPPR and SPPU track Bloomberg SASB Euro Corporate and US Corporate ESG ex-controversies select indices.
They seek to offer exposure to the flagship Bloomberg Barclays Corporate indices but exclude issuers that are associated with extreme event controversies, controversial weapons, UNGC violations, civil firearms, thermal coal extraction and tobacco production.
The underlying indices select and weight securities to maximise the portfolio ESG score while maintaining similar risk and return characteristics of the parent indices.
The ESG scores are derived from SSGA's R-Factor scoring system. This measures the performance of a company’s business operations and governance as it relates to financially material ESG challenges facing the company’s industry.
The R-Factor system is also materialised with SASB, an independent, non-profit standards-setting organisation for ESG reporting.
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Matteo Andreetto (pictured), head of SPDR, EMEA, at SSGA, said: “Trends that have been bubbling under the surface for the last decade have now come to a head, making ESG a significant and central building block of a portfolio.
“The investment industry is responding well to these trends, providing investors with more solutions to satisfy a growing appetite for ESG factors in portfolios.”
Antoine Lesné, head of research and strategy for SPDR, EMEA, at SSGA, added: “By providing a similar risk/return profile to the two broad parent indices, investors can use our new ETFs to complement their core asset allocation or use them as replacement strategies.”
SSGA has launched two smart beta products in recent weeks including a global value ETF and a global low volatility ETF.