Legal & General’s asset management division has launched a corporate bond ex-banks ETF in what the firm calls a first of its kind.
The L&G Corporate Bond ex-Banks Higher Ratings UCITS ETF aims to provide investors with exposure to highly rated Euro- and USD- denominated corporate bonds with a short duration and exclude bank issuers.
Anchor investor in this ETF is German asset manager Gerd Kommer Invest (GKI).
According to a press statement, the banking sector accounts for a large share of total issuance within today’s global corporate bond market. Such concentration can limit the diversification effects of many corporate bond indices on the market.
By choosing an ex-banks approach, this ETF seeks to mitigate this concentration risk by giving investors a more diversified sector exposure.
Aanand Venkatramanan, Head of ETFs EMEA, said: “Investors have long recognised the issue of bank issuer concentration in market-cap weighted corporate bond indices.
“We are excited to introduce this first of its kind ETF to the market which enables investors to benefit from the yield opportunity short-duration corporate bonds provide, with the added overlay of true diversification given the exclusion of bank issuers.”
