UBS Asset Management has launched an ESG ETF that captures the most liquid part of the US corporate debt market.

The UBS ETF Bloomberg MSCI US Liquid Corporates 1-5 Year Sustainable UCITS ETF (CBS5) is listed on the London Stock Exchange, Deutsche Boerse, Borsa Italiana and SIX Swiss Exchange with a total expense ratio (TER) of 0.20%. Currency-hedged iterations of the product are also available with a fee of 0.25%.

CBS5 tracks the Bloomberg MSCI US Liquid Corporates 1-5 Year Sustainable index of bonds issued by US industrial, utility and financial companies that meet specific maturity, credit quality, liquidity and ESG requirements.

Like its parent index, the liquid corporates sustainable index only captures securities with between one and five years to maturity, $1bn outstanding in the market and a time since issuance of less than two years.

Included within the index are bullet, putable and callable bonds, original issue zero-coupon bonds, underwritten medium-term notes (MTN), enhanced equipment trust certificates (EETC), certificates of deposit and fixed rate and fixed-to-float capital securities.

Each issuer is capped at 5% of the index and must be BBB rated or above.

Based on MSCI’s ESG ratings, issuers are excluded if involved in adult entertainment, alcohol, gambling, tobacco, conventional weapons, civilian firearms, nuclear weapons, controversial weapons, nuclear power, thermal coal, fossil fuels and GMOs. The index also excludes those with a “Red” ESG Controversies score.

CBS5 joins the UBS ETF Bloomberg MSCI Euro Area Liquid Corporates 1-5 Year Sustainable UCITS ETF (CBSE), which recently changed its underlying index to the Bloomberg MSCI Euro Area Liquid Corporates 1-5 Year Sustainable index

Clemens Reuter (pictured), global head of ETF and index fund client coverage at UBS AM, said: “CBS5 and its peer’s index change complement our existing investment-grade credit ETF offering and solidify our position in the fixed income sustainable space.

“Thanks to our customisation, 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.” 

CBS5 adds to UBS AM’s footprint in the fixed income ESG space after the UBS ETF Sustainable Development Bank Bonds UCITS ETF (MDBUA) broke through $1bn assets under management (AUM) last April.

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