Amundi has introduced its second fixed income ETF to provide exposure to euro-denominated corporate bonds while adhering to the carbon reduction goals of the Paris Agreement.
Arnaud Llinas, Head of ETF, Indexing, and Smart Beta at Amundi.
The Amundi EUR Corporate Bond Climate Net Zero Ambition PAB UCITS ETF has been created by repurposing a €1 billion ESG-tailored euro corporate bond ETF that Amundi obtained through its acquisition of French rival Lyxor last year.
The fund has switched its underlying index and is now linked to the Bloomberg MSCI Euro Corporate Paris Aligned Green Tilted Index.
The new index begins its construction process from an initial universe of investment-grade, fixed-rate corporate bonds denominated in euros with at least one year remaining until final maturity. Eligible issuers must have a minimum of €300m par outstanding.
The methodology first screens out proven violators of UN Global Compact principles, issuers embroiled in severe ESG-related controversies, and firms with business activities linked to weapons, tobacco, thermal coal, and oil & gas.
The remaining securities are then weighted using an optimization process that is designed to meet the requirement of an EU Paris-aligned benchmark (EU PAB). Specifically, the index achieves an instant 50% reduction in total carbon intensity relative to its parent universe and pursues an additional year-on-year decarbonization trajectory of at least 7% moving forward. These requirements align the index with a 1.5°C climate change scenario through 2050.
The optimization process further aims to overweight green bonds – securities whose proceeds have been earmarked for projects having a direct positive impact on the environment – while also seeking to limit deviations in sector and duration bucket exposures relative to the parent universe.
The ETF is listed on London Stock Exchange in pound sterling (CRPX LN), as well as on Euronext Paris (CRP FP), Xetra (LYEB GY), SIX Swiss Exchange (LYCRP SW), and Borsa Italiana (CRPE IM) in euros.
The fund comes with an expense ratio of just 0.14%, making it the most competitive ETF in Europe offering Paris-aligned euro corporate bond exposure.
Arnaud Llinas, Head of ETF, Indexing, and Smart Beta at Amundi, said: “ETFs are important building blocks to support the climate transition for bond portfolios. With this new ETF, we continue to commit to transforming our ETF range to provide investors with a broad range of climate-conscious ETFs, both in equity and fixed income asset classes.”
Rival funds include the €440 million iShares € Corp Bond ESG Paris-Aligned Climate UCITS ETF (CBUJ GY), which comes with an expense ratio of 0.15%; and the €2.3bn Xtrackers EUR Corporate Bond SRI PAB UCITS ETF (XB4F GY), which costs 0.16%.
Amundi also offers another Paris-aligned euro corporate bond ETF based on a different methodology. Launched in April 2021, the Amundi iCPR Euro Corp Climate Paris Aligned PAB – UCITS ETF (PABC GY) currently houses €30m and has an expense ratio of 0.16%.