Fund Solutions

This Week’s Fund News: BlackRock Responds to Rising Demand with Bond ETF

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BlackRock, WisdomTree, BNP Paribas AM, MetLife IM, The Wharton Social Impact Initiative and Penn Medicine.

BlackRock has announced the launch of the iShares Global Aggregate Bond ESG UCITS ETF following increased demand from investors to incorporate ESG into their fixed income portfolios. The fund, which tracks the Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI Index, offers broad, diversified exposure to the global bond market across 70 countries and over 30 currencies. The index adopts a best-in-class approach including a series of ESG and business involvement screens as well as excluding issuers with an MSCI ESG rating lower than BBB. It also aims to achieve a measurable environmental impact by allocating at least 10% of its market value to green bonds. “As the shift to sustainable investing continues to accelerate, we have seen strong demand, from across client segments – for a sustainable global aggregate exposure,” said Brett Olson, Head of Fixed Income iShares in EMEA for BlackRock. “Many investors transitioning their fixed income allocations are embracing indexing due to the diversification, transparency and efficiency that ETFs provide.” The fund supports BlackRock’s expectation that 70% of its fund launches and re-positionings in Europe in 2021 will be Article 8 or 9 compliant under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

ETF specialist WisdomTree has launched the fully collateralised WisdomTree Carbon ETP (CARB) allowing investors to gain exposure to the performance of carbon emission allowances. The CARB, listed on the London Stock Exchange, seeks to reflect the movement in the price of the ICE Carbon Emission Allowances (EUA) futures contract through the Solactive Carbon Emission Allowances Rolling Futures TR Index. The European Union Emissions Trading Scheme (EU ETS) is the world’s biggest carbon market and supports the bloc’s efforts to mitigate climate change and reduce greenhouse gas emissions. “Climate change mitigation is front of mind for investors, corporates and policymakers alike, with many seeking to reduce their carbon footprint and align with the Paris Agreement,” said Alexis Marinof, Head of Europe, WisdomTree. Total EU carbon emission allowances trading activities were valued at over €201billion in 2020, equivalent to 8,096 million tonnes of carbon dioxide, an increase of 19% from a year earlier.

BNP Paribas Asset Management has launched the BNP Paribas Easy MSCI China Select SRI S-Series 10% Capped UCITS ETF, the first listed fund to invest in a Chinese index using a Socially Responsible Investment (SRI) methodology. The fund gives investors access to large and mid-cap Chinese companies with the best ESG profile in their sector, using a ‘best in class’ approach. Companies that do not respect the principles of the United Nations Global Compact or are involved in ESG controversies are excluded from the index. Companies involved in sectors such as fossil fuels, alcohol and tobacco are also unwelcome. Isabelle Bourcier, Head of Quantitative & Index Management at BNPP AM, said: “The originality of this approach is that it allows the implementation of a sustainable investment strategy in a key economic region. This new ETF completes our ESG Index fund offering, with EUR 12.8billion under management making BNPP AM one of the market leaders.”

MetLife Investment Management, the institutional asset management business of MetLife, has arranged £122.5million in loan notes for Triple Point Social Housing REIT plc to refinance existing debt and support the future growth of the company. Triple Point is trying to address the ongoing housing crisis by investing in the UK social housing sector providing sustainable high-quality homes which have been adapted for vulnerable adults with long-term care and support needs including mental health issues, learning disabilities, or physical and sensory impairment. “We are delighted to have entered into our second debt funding with Triple Point. We value their continued effort to invest in social housing in the UK, with a particular focus on specialized housing for vulnerable people with care and support needs. This financing shows how we at MetLife live our purpose and commit to sustainability in communities all over the world,” said Annette Bannister, Head of European Infrastructure and Project Finance at MetLife Investment Management.

The Wharton Social Impact Initiative of the University of Pennsylvania’s Wharton School and Penn Medicine have launched a new US$5 million investment initiative called Fund for Health for businesses that improve the health of local people. The fund seeks to invest in early-stage businesses striving to strengthen the social determinants of health of economically disadvantaged Philadelphians. The three companies receiving a total of US$750,000 in the first round of funding including Kinvolved, which is developing communications software to reduce absenteeism in underserved school districts and Uptrust a customer relationship management tool keeping people out of jail by avoiding unnecessary technical violations such as missing court dates.

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