Industry Updates

UBS AM to merge euro corporate bond ETFs

The receiving ETF is categorised Article 8 under SFDR

Jamie Gordon

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UBS Asset Management will merge its euro corporate bond ETF into a sustainable equivalent next month.

Effective 15 December, the $43m UBS ETF Bloomberg Euro Area Liquid Corporates UCITS ETF (UB99) will be absorbed by the $674m UBS ETF Bloomberg MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (CBSE).

The move will see UB99 investors switch from tracking the Bloomberg Euro Area Liquid Corporates index to the Bloomberg MSCI Euro Area Liquid Corporates Sustainable index.

By incorporating ESG ratings – and criteria including religious beliefs, moral standards and other ethical views – CBSE’s basket captures a narrower basket of 674 bond issuances versus 906 for UB99.

UB99 is categorised Article 6 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) while CBSE is Article 8. 

The merger will also see fees increase for UB99 investors, from a 0.18% total expense ratio (TER) on their current ETF to 0.20% as part of CBSE.

UBS AM said: “Given the merging sub-fund's low and further decreasing assets and in order to rationalise and simplify the fund offering, the board of directors of the company deems it in the shareholders' best interest to merge the merging sub-fund into the receiving sub-fund.” 

The merger is only the latest step the issuer has taken to align its product range with ESG principles after launching the UBS ETF Global Green Bond ESG 1-10 UCITS ETF (GREENE) in July.

Earlier the same month, UBS AM switched its US quality and prime value factor ETFs to indices incorporating ESG characteristics.

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