Deutsche Asset Management (Deutsche AM) has launched a fixed income ETF that will give investors exposure to the socially responsible European bond market.
The db x-trackers II ESG EUR Corporate Bond Ucits ETF will track the Bloomberg Barclays MSCI Euro Corporate Sustainable and SRI Index. The index screens companies for environmental, social and governance (ESG) requirements.
For inclusion in the index bonds have to be investment grade and have at least €300 million in outstanding notes. Despite the ESG requirements, the index is highly similar to its non-ESG counterpart, with a 99% correlation.
Following the pattern of many ETF providers, the product replicates its index physically, rather than synthetically with derivatives.
There is an annual all-in-fee of 0.25% for the new ETF, which is listed on the Deutsche Börse.
“More investors are starting to access fixed income exposure using ETFs, so it is important to have ESG-focused bond exposure available in ETF form alongside our existing solutions,” said Petra Pflaum, Deutsche AM’s chief investment officer for responsible investments.
Db-x-trackers is the second largest ETF provider in Europe, with €59 billion in assets under management.
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