Fidelity launches two sustainable bond ETFs

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Fidelity Investments has launched two new socially responsible ETFs in the US delivering core and short-duration fixed income exposures.

The Fidelity Sustainable Core Plus Bond ETF (FSBD US) and Fidelity Sustainable Low Duration Bond ETF (FSLD US) have been listed on NYSE Arca with expense ratios of 0.36% and 0.30%, respectively.

Both ETFs invest in a broad range of fixed income sectors including Treasury, government-related, corporate, and securitized bonds. Up to 20% of the assets in each portfolio may be allocated to bonds rated high yield including those issued in emerging markets.

The funds harness Fidelity’s proprietary ESG ratings framework, as well as third-party ESG rating providers, to identify issuers that are not only successfully managing their ESG risks but are also making positive impacts through sustainable business practices.

When selecting individual securities, Fidelity considers an issuer’s credit, currency, and economic risk.

The main difference between the two ETFs is that the Fidelity Sustainable Core Plus Bond ETF aims to match the interest rate risk of the broad market Bloomberg MSCI US Aggregate ESG Choice Bond Index, while the Fidelity Sustainable Low Duration Bond ETF targets an aggregate duration of under one year.

Pam Holding, Head of Sustainable Investing at Fidelity Investments, said: “Fidelity continues to grow its sustainable investing line-up with a range of equity, fixed income, and asset allocation strategies, as investors continue to seek opportunities to invest alongside their values and influence positive change in the world.

“With the addition of these new sustainable fixed income strategies, our clients now have access to building blocks across multiple asset classes to help address their investment goals and priorities.”