Lyxor Asset Management has reduced the fees on three fixed income environmental, social and governance (ESG) ETFs, making them the cheapest available on the European market.

The Lyxor ESG Euro Corporate Bond UCITS ETF (CRPX), the Lyxor ESG USD Corporate Bond UCITS ETF (USIX) and the Lyxor ESG Euro Corporate Bond Ex Financials UCITS ETF (CBEF) have seen their total expense ratios (TERs) cut from 0.20% to 0.14%.

Along with the fee cuts, the French asset manager has switched the three ETFs from synthetic to physical replication, however, they will not take part in securities lending.

The firm added it will make similar changes to other parts of its fixed income ETF range this year.

Tracking the Bloomberg Barclays MSCI SRI Sustainable indices, the three ETFs offer investors exposure to issuers with an MSCI ESG rating of BBB and above while excluding those which derive 5% or more of their turnover from activities including thermal coal, unconventional oil and gas, arctic gas, and arctic oil.

Philippe Baché, head of fixed income ETFs at Lyxor, commented: “Investors are increasingly looking for simple, transparent and competitive fixed income exposures which integrate ESG considerations.” 

“The changes we are making to our credit ETFs, now and in the future, allied to our world-leading green bond ETF, are designed to help them build more sustainable fixed income portfolios capable of accelerating the transition to a low carbon economy.”

Demand for sustainable strategies exploded last year with ESG ETFs in Europe outpacing non-ESG ETFs following a record €45.5bn inflows over the 12 months, according to data from Lyxor.

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