BlackRock to move €1.4 billion corporate bond ETF to ESG index

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BlackRock plans to turn a €1.4 billion iShares corporate bond exchange-traded fund into an environmental, social and governance index in response to investor demand.

The world’s largest asset manager has asked shareholders of its Dublin-domiciled iShares € Corp Bond ex-Financials Ucits ETF to approve a change to the Bloomberg MSCI Euro Corporate ex Financials Sustainable SRI index at a general meeting extraordinary on March 25.

The ETF, which was launched in 2009, currently tracks the Bloomberg Barclays Euro Corporate ex-Financials Bond Index.

The ETF will transition to the new sustainable index in mid-May, subject to shareholder approval, and will have an ESG tag added to its name.

This article was previously published by Ignites Europe, a title owned by the FT Group.

The proposed change means the ETF will in future be classified as an Article Eight fund under the EU Sustainable Financial Disclosure Regulation.

BlackRock said the proposed index change responds to “increased investor demand to evolve the existing fund to adopt ESG characteristics while maintaining its broad market exposure.”

“We believe that where improvements can be made to improve the ESG characteristics of a portfolio while continuing to provide a similar or improved risk/return profile, such improvements are in the best interests of investors,” the manager said. assets.

BlackRock, which has about $10 billion in assets under management, said no changes would be made to the ETF’s total expense ratio, which stands at 0.2%.

The American mutual fund giant has changed the indices of several iShares products. Competing asset managers such as DWS and BNP Paribas Asset Management have also changed benchmarks on some of their ETFs.

Fund pickers have recently expressed their doubts about changes to passive fund indices to incorporate ESG factors.

Experts have warned that not all breeders are at the same stage of their “ESG journey” and that changing the underlying indices could lead to a loss of confidence.

*Ignites Europe is an information service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.

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