BlackRock Launches ESG Version of $ 38 Billion Corporate Bond ETF | ETF Strategy

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Black rock launched a new bond ETF targeting the quality US dollar corporate bond market while incorporating in-depth environmental, social and governance (ESG) review.

Carolyn Weinberg, Global Head of iShares Products at BlackRock.

the IShares ESG Advanced Investment Grade Corporate Bond ETF (ELQD US) has been registered on NYSE Arca and entered the market with $ 20 million in assets.

The new product is designed to serve as a sustainable version of BlackRock’s flagship USD corporate bond ETF, the $ 38.5 billion IShares iBoxx $ Investment Grade Corporate Bond ETF (LQD US).

Methodology

ELQD is linked to IBoxx MSCI ESG Advanced USD Liquid Investment Grade Index which is based on a universe of investment grade bonds denominated in US dollars of private issuers domiciled in developed markets and with an outstanding debt of at least $ 750 million.

Eligible issues include fixed rate, step-up and redeemable bonds with a maturity of at least three years.

The construction of the index is based on several filters which filter the issuers according to climatic, securities and ESG rating criteria.

The climate-based screen removes emitters tied to fossil fuel industries (such as thermal coal, oil and gas), including ownership of reserves, related income, and power generation. In addition, companies with high carbon emissions above a “controversial” threshold are also eliminated.

The value-based screen removes violators of the principles of the United Nations Global Compact and transmitters with significant business operations related to adult entertainment, alcohol, civilian firearms, controversial weapons, conventional weapons , for-profit prisons, gambling, genetically modified organisms, nuclear power, nuclear weapons, palm oil, predatory loans and tobacco.

Issuers that remain after these two selections are assigned ESG ratings from MSCI ESG Research that reflect their ability to handle a wide range of ESG issues relative to their industry peers. Issuers rated BB (lower average) and lower are deleted.

The remaining issues are weighted by the market value within a limit of 3% per issuer. The index is rebalanced monthly.

The ETF comes with an expense ratio of 0.18%.

Carolyn Weinberg, Global Head of Product for iShares at BlackRock, said: “We are proud to further expand our lineup today with an ESG Fixed Income Fund. This fund also enables our clients to build strong portfolios tailored to their sustainable goals and navigate the transition to a low carbon economy.

“We believe that enduring characteristics are linked to risk and return. Our sustainable ETF platform aims to democratize sustainable investing and provide choice to our clients in their investment quest with a focus on companies that perform well in environmental, social and governance assessments.


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