UBS Asset Management has launched a new fixed income ETF in Europe providing sustainable exposure to short-term corporate bonds issued in the US domestic market.
UBS offers a comprehensive suite of ESG-tailored corporate bond ETFs.
The UBS ETF (LU) Bloomberg MSCI US Liquid Corporates 1-5 Year Sustainable UCITS ETF has been listed on London Stock Exchange (CBS5 LN), SIX Swiss Exchange (CBSU5 SW), and Borsa Italiana (U15S IM) in US dollars.
The fund comes with an expense ratio of 0.20%.
Currency-hedged share classes, which cost 0.25%, are also available on Xetra (AW1M GY) and Borsa Italiana (U15E IM) in euros and on SIX in Swiss francs (CBSUS5 SW).
The fund is linked to the Bloomberg MSCI US Liquid Corporates 1-5 Year Sustainable Index which begins its construction process from a universe of fixed-rate, investment-grade debt denominated in US dollars and issued by corporate issuers domiciled in the US.
Eligible securities must have a remaining time to maturity between one and five years and be issued by issuers with a minimum of $1 billion in par value outstanding.
The methodology first screens out companies embroiled in severe ESG-related controversies as well as firms deriving significant revenue from adult entertainment, alcohol, tobacco, military or civilian weapons, nuclear power, gambling, coal, oil, or gas.
The remaining issuers are then assigned ESG ratings based on the most relevant ESG factors by industry. MSCI‘s ESG rating schedule runs on a seven-point scale from ‘CCC’ to ‘AAA’ with firms required to possess a rating of at least ‘BBB’ (average) to remain eligible for the index.
Constituents are weighted by market value while limiting the influence of any single issuer to 5%.
UBS offers a diverse suite of ESG-tailored corporate bond ETFs including funds providing broad maturity exposure to bonds issued in US dollars, euros, or multiple currencies. The firm also serves up a short-term eurozone corporate bond ETF.
Andrew Walsh, Head of ETF & Index Fund Sales for UK & Ireland at UBS Asset Management, said: “This new fund complements our existing investment-grade credit ETF offering and solidifies our position in the fixed income sustainable space. Thanks to our customization, these funds meet the demands of clients who are interested in gaining exposure to the liquid short-maturity part of the US and Eurozone credit markets, in a sustainable manner.”