Bringing you live news and features since 2006 

Invesco launches global high yield ESG ETF 

RELATED TOPICS​

Invesco writes that fixed income and ESG flows are two themes standing out in the ETF market in 2022. Bond funds captured nearly 40 per cent of all ETF net inflows during the year, while ETFs incorporating ESG considerations gathered 60 per cent of the overall market flows. Invesco believes both themes could continue into 2023 but with potentially greater demand for corporate bond exposures rather than the government bonds that dominated flows in 2022.

Invesco continues to expand its corporate bond ESG range with the launch of the Invesco Global High Yield Corporate Bond ESG UCITS ETF. The ETF aims to track the Bloomberg MSCI Global High Yield Liquid Corporate ESG Weighted SRI Bond Index, which incorporates both exclusionary filters and tilting to overweight issuers with a strong ESG profile. It follows a similar methodology to Invesco’s investment-grade corporate bond ESG ETFs but with a focus on global high yield.

Securities are excluded from the index if they have an MSCI ESG rating below BB (or do not have a rating); have faced very severe controversies pertaining to ESG issues 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 or weapons.

Each of the eligible component securities is then assigned an ESG score using MSCI ESG metrics. This ESG Score is then applied to re-weight the eligible securities from their natural weights as a result of the notional size of the bond, to construct the weighting of the index. Issuers are capped at 5 per cent of the market value of the index. The index rebalances monthly.

Paul Syms, Head of EMEA Fixed Income ETF Product Management at Invesco, says: “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. Government bonds took the lion’s share of fixed income assets in 2022, with the Invesco US Treasury Bond 7-10 Year UCITS ETF leading the pack with USD3.3 billion of net new assets. We believe the pick-up in corporate bond flows seen towards the end of the year could continue in 2023 as a change in Fed focus away from fighting inflation and towards stimulating growth may support credit and high yield.”

Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, says: “It’s 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. This latest fund launch is our 26th fixed income ETF, representing just over 20 per cent of our ETFs in Europe.”

Latest News

Sprott Asset Management, a wholly-owned subsidiary of Sprott Inc has announced the launch of four ETFs focused on providing investors..
Tradeweb Markets Inc. has reported total trading volume for January 2023 of USD23.2 trillion (tn). Average daily volume (ADV) for..
Strive Asset Management has launched its eighth index fund: the Strive Emerging Markets Ex-China ETF (STXE). The firm writes that..
Some big forces moved further into ETF issuance this week, with Capital Group launching 12 new active/passive model portfolios, and..

Related Articles

ETF
We are very pleased to open the voting for service providers (selected by nominations) and ETP issuers, selected by our data partners, Trackinsight, for the European ETF Express Awards, in...
Bitcoin
Osprey Funds’ founder and CEO, Greg King, has written an open letter to Barry Silbert, majority owner of Digital Currency Group which owns Grayscale, suggesting that he uses his powers...
Captain
Comparing multifactor ETFs to the popular Marvel Avengers series may seem a bit of a stretch but recent analysis from Morningstar suggests the investment strategies have more in common with...
Mackenzie
Canadian asset manager Mackenzie Investments, with CAD186.6 billion under management, has published its annual Mackenzie Investments Year-End ETF Report. ...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by