Invesco has expanded its fixed income ESG range with the launch of a global high yield ETF.
The Invesco Global High Yield Corporate Bond ESG UCITS ETF (GBHY) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.25%.
GBHY tracks the Bloomberg MSCI Global High Yield Liquid Corporate ESG Weighted SRI Bond index which offers exposure to high yield bonds with strong ESG scores.
To be included in the index, securities must have an MSCI ESG rating of above BB. This ESG score is then used to re-weight the securities in the index.
Securities are excluded if they have faced severe ESG controversies over the last three years or are involved in alcohol, adult entertainment, genetically modified organisms, nuclear power, oil sands, thermal coal, tobacco, unconventional oil and gas and weapons.
Rebalancing monthly, GBHY caps each issuer in the index at 5%.
Paul Syms, head of EMEA fixed income ETF product management at Invesco, commented: “Demand for fixed income ETFs has grown substantially in recent years, partly the result of greater understanding from investors but also because of the availability of new products.
“We believe the pick-up in corporate bond flows seen towards the end of the year could continue in 2023 as a change in Federal Reserve focus away from fighting inflation and towards stimulating growth may support credit and high yield.”
Gary Buxton (pictured), head of EMEA ETFs and indexed strategies at Invesco, added: “It is clear from market data that investors are increasingly choosing ETFs for the fixed income components of their portfolios.
“Investor demand has driven Invesco’s product development, leading to our expanded range of fixed income ETFs, with low-cost core exposures alongside those that provide access to more innovative segments of the market.”
The launch of GBHY takes Invesco’s fixed income ETF range in Europe to 26.
Last October, the firm unveiled a long-duration US Treasury ETF, the Invesco US Treasury Bond 10+ Year UCITS ETF (TREL).
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