Legal & General Investment Management (LGIM) bolstered its fixed income exchange traded fund (ETF) range with the launch of a new green bond ETF.
The L&G ESG Green Bond UCITS ETF tracks the JP Morgan ESG Green Bond Focus Index, which aims to provide exposure to green bonds issued across hard currency, credit and local currency government bonds.
The fund incorporates green bonds that have been reviewed independently by the Climate Bonds Initiative and the portfolio of global constituents has an average credit rating of A+.
According to LGIM, the fund incorporates an ESG scoring and screening methodology, allocates more money towards issuers ranked higher on ESG criteria and certified climate bond issues and invests less money in green bond issues that have not been reviewed independently.
The range excludes the lowest scoring bond issuers and controversial industries, including weapons manufacturers, thermal coal miners, tobacco companies, oil sands (from March 2021) and violators of the UN Global Compact.
The other additions to the fixed income fund range, which were listed in January, include the L&G ESG USD Corporate Bond UCITS ETF and the L&G ESG Emerging Markets Corporate Bond UCITS ETF.
“As with the rest of the range, we have designed these new ETFs to be portfolio building blocks that answer to investors’ increasing call for ESG integration and liquidity considerations,” said Howie Li, head of ETFs at LGIM. “These funds incorporate ESG as standard and employ a liquidity-aware approach, including increased minimum issuance thresholds relative to traditional benchmarks to improve the overall liquidity profile.”
James Crossley, head of UK retail sales at LGIM, added:
“By leveraging on LGIM’s fixed income index experience, the investment strategy of these ETFs transparently addresses the inefficiencies commonly found in index investing. These indices have been designed to avoid crowded trades and to put cash to work more efficiently. The eight funds in the range address investors’ increasing need to gain exposure to core fixed income.”
Source Investment Week