XTB, the Australian company that puts the corporate bonds of single companies into ETF wrappers, has rolled out a new actively managed portfolio of ESG bonds and put it on HUB24.
The new portfolio, called the XTB Emerald Fixed Income Portfolio, is made of bonds issued by Aussie companies that meet The Emerald Club's ESG screening criteria. The Emerald Club is a Sydney-based consultancy that promotes ESG investing.
The portfolio has an absolute return objective of 1% higher than the cash rate.
"The portfolio includes ASX-traded XTBs with underlying bonds from companies considered to have sound ESG policies," says Richard Murphy, XTB co-founder and CEO.
"The portfolio is comprised of companies which are able to provide viable returns to investors while at the same time mitigating the environmental and social impacts of their business activity, operating in a manner respectful of society and managing within emerging ecological constraints. It helps advisers to match their client's investments with their values."
The ESG screen looks at various metrics including companies' total greenhouse gas emissions, water intensity per sales, and renewable energy use.
XTBs grew its funds under management by 117% last year, with assets shooting up to $265 million from $122 million in 2016.
"XTBs are helping to fill the gap between low risk, low return term deposits and higher risk equities in the Australian market," Mr Murphy said.
"Corporate bonds are the missing link on the ASX, providing retail investors with up to 50%2 greater returns than term deposits, with the added convenience of daily liquidity through ASX trading.
"More than doubling FUM in a year is testament to the fact that many investors have been seeking alternative defensive investments for their portfolios."
There are now more than 50 XTBs available on the Australian market, which give investors exposure to specific, individual corporate bonds issued by blue-chip companies including AMP, BHP, Qantas, and Telstra.