Green bond ETFs make it easy for retail investors to add diversified green bond exposure to their portfolios. This way, investors can confidently ensure that their fixed income is directed to environmentally friendly projects without worrying about scaling, diversification, or any other concerns of running a bond portfolio.
the iShares Global Green Bond ETFs (BGRN) is the largest green bond ETFs with over $250 million in net assets. With more than 750 green bonds, it also has the most diversified bond portfolio. Additionally, the fund charges an expense ratio of 0.2% and offers an annual return of 0.81% over 12 months, making it a great option for investors.
the VanEck Vectors Green Bond ETFs (GRNB) owns over 300 green bonds with an expense ratio of 0.2% and a rolling 12-month yield of 2% paid as monthly distributions. contrary to BRGNthe fund focuses on US dollar-denominated bonds certified by the Climate Bonds Initiative, meaning the portfolio can adhere to higher standards.
When investing in these ETFs, remember that green bond funds have many of the same risks as other fixed income ETFs. For example, you might want to assess the duration of the bond portfolio for interest rate exposure and credit ratings for default risk while keeping in mind the expense ratio and liquidity of each fund.