BlackRock is set to launch Europe’s first high yield ETF with an environmental, social and governance (ESG) tilt.

The iShares USD High Yield Corp Bond ESG UCITS ETF (DHYE) is set to list on the London Stock Exchange on 14 November with a total expense ratio (TER) of 0.50%.

DHYE tracks the Bloomberg Barclays MSCI USD Corporate High Yield Sustainable BB+ SRI Bond index, which employs MSCI’s ESG ratings combined with a Bloomberg parent index.

Brett Olson, head of iShares fixed income, EMEA, at BlackRock, commented: "While the conversation around sustainability started out in equities, innovation in ESG bond indices is picking up pace and with it the ability to build ESG-centered multi-asset portfolios.

"In tandem, bond ETFs themselves are becoming ubiquitous as efficient tools for all types of investors. These two factors make this asset class ripe for future growth."

The world’s largest asset manager has made a big push in the ESG ETF market this year with the launch of an enhanced equity suite in March, which track MSCI indices.

BlackRock and UBS are the dominant players in the ESG ETF space in Europe and this year the two issuers have taken in €1.7bn and €1.6bn, respectively, as at the end of June.

Overall, ESG ETFs account for 15.7% of total passive sustainable assets versus just 6.5% five years ago, according to data from Morningstar.