UBS Asset Management (UBS AM) has announced the launch of a green bond exchange traded fund (ETF) that tracks the new Bloomberg MSCI Global Green Bond 1-10 Year Sustainability Select index. This index is based on the Bloomberg MSCI Global Green Bond index, with additional sustainability considerations.
Green bond proceeds can only be used for sustainable objectives, for example, supporting climate-related or environmental projects such as renewable energy, clean transportation, or sustainable water management.
While the parent index already excludes controversial weapons and thermal coal, the new index considers investors’ sustainability preferences, applying broader exclusions of conventional weapons, civilian firearms, tobacco, alcohol, oil sands, and Arctic oil. The index also excludes issuers with an MSCI ESG rating below BBB or an MSCI ESG Controversy score of zero; furthermore, it filters out bonds with maturities over 10 years and applies a three per cent issuer cap to improve diversification.
The new ETF is aligned with Article 8 of the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management comments: “Investors are increasingly seeking innovative solutions to help meet a range of climate and sustainability needs. This ETF enables investors to gain global exposure to green bonds with environmental benefits – while also considering the ESG profile of the underlying issuers.”
The UBS (Lux) Fund Solutions – Global Green Bond ESG 1–10 UCITS ETF is available unhedged in USD as well as in a EUR hedged version. It is passively managed and listed across key European exchanges, including Xetra, Borsa Italiana, and SIX Swiss Exchange.
