Fidelity has announced the addition of two Paris-Aligned Benchmark (PAB) ETFs to its active multi-factor fixed income portfolio, tracking Solactive indices.
The newly launched Fidelity Sustainable EUR Corporate Bond Paris Aligned Multifactor UCITS ETF (FUIG) and the Fidelity Sustainable USD Corporate Bond Paris Aligned Multifactor UCITS ETF (FEIS) are designed to be benchmarked against the Solactive Euro Corporate IG PAB Index and the Solactive USD Corporate IG PAB Index.
These ETFs are aligned with the Paris Agreement, with an initial decarbonisation target of 50 per cent compared to the parent benchmark, along with an additional decarbonisation goal of 7 per cent per year. Companies deriving more than 10 per cent of their revenues from fossil fuel-related activities, including production, exploration, distribution, and services, will be excluded from the ETFs. Other exclusions pertain to companies generating over 50 per cent of their revenues from fossil fuel-based electric power generation or that are involved in tobacco production, controversial weapons, and violations of the UN Global Compact.
The ETFs fall under Article 9 classification as per the Sustainable Finance Disclosure Regulation (SFDR).
Both funds are now listed on the London Stock Exchange, Deutsche Börse, and Euronext Milan.
In March, the asset manager launched the Fidelity Global Government Bond Climate Aware UCITS ETF, tracking the Solactive Paris Aware Global Government USD index, which offers exposure to the performance of global local currency bonds of investment grade countries.
In November 2022, Fidelity launched two other climate-focused solutions benchmarked against Solactive indices. The Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF, tracking the Solactive Paris Aligned Global Corporate High Yield USD index, and the Fidelity Sustainable Global Corporate Bond Paris-Aligned Multifactor UCITS ETF tracks the Solactive Paris Aligned Global Corporate USD.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “Climate change represents one of the most significant challenges of our era, leading to a growing need for climate-conscious investment strategies. As we work towards a more sustainable planet, Solactive is dedicated to the continued development of investment solutions that cater to that. We are delighted that Fidelity shares this commitment and has selected Solactive as the index provider for their latest product. Our track record in active investments spans several years, and we very pleased to be now consolidating it also within the fixed-income arena.”
Stefan Kuhn, Head of ETF Distribution, Europe, at Fidelity International, says: “ETFs are growing in popularity as investors hunt for alternative vehicles that can deliver alpha. Indeed, the ETF market has grown from around USD200 billion globally in 2003 to more than USD9.5 trillion in 2022 and is expected to reach USD15 trillion in just five years. Since its launch in 2021, our Sustainable Global Corporate Bond Multifactor UCITS ETF has proved popular with clients, utilising Fidelity’s active research platform and our sustainability expertise to identify best-in-class corporate bonds at an attractive price point. We are pleased to expand on this to include regional variations of the successful strategy, in line with client demand.”
