State Street Global Advisors launches two core ESG Fixed Income ETFs
State Street Global Advisors (SSGA), the asset management business of State Street Corporation (NYSE: STT), has launched the SPDR Bloomberg SASB Euro Corporate ESG UCITS ETF (SPPR GY). The SPDR Bloomberg SASB US Corporate ESG UCITS ETF (SPPU GY) will also launch on Monday 26 October.
Together, the two new ETFs will provide access to European and US Investment Grade corporate bonds transparently and efficiently, tracking proprietary index methodologies developed by Bloomberg Indices in collaboration with the Sustainability Accounting Standards Board (SASB).
The fixed income ETFs, SPPR GY and SPPU GY, seek to provide investors with a total return, taking into account both capital and income returns, which reflects the return of the Bloomberg SASB Euro Corporate and U.S. Corporate ESG Ex-Controversies Select Indexes, while pursuing an effective, positively screened and benchmark aware ESG methodology.
The Bloomberg SASB Corporate ESG Ex-Controversies Select Indexes start with the universe of the parent index, the flagship Bloomberg Barclays Corporate Indexes, and exclude issuers that are tagged with extreme event controversies, controversial weapons, UNGC violations, civilian firearms, thermal coal extraction, and tobacco production. The index then selects securities and their corresponding weights to maximise the portfolio ESG score while maintaining similar risk and return characteristics of the parent index.
ESG scores are derived from the State Street Global Advisors R-Factor™ (Responsibility Factor) scoring system, one which leverages multiple data sources and aligns them to widely accepted, transparent materiality frameworks to generate unique ESG scores for listed companies. It measures the performance of a company’s business operations and governance as it relates to financially material ESG challenges facing the company’s industry. It is designed to provide companies a roadmap to improve ESG practices and disclosure, and to help create sustainable capital markets.
At the heart of R-Factor is the SASB materiality map. SASB is an independent, non-profit standards-setting organisation for ESG Reporting supported by investors globally representing USD48 trillion.
Antoine Lesné, Head of Research & Strategy for SPDR in EMEA, says: “With the launch of our two new investment grade ESG focused ETFs, we are providing investors with a new and innovative approach to positively screen in a transparent and ‘best in class’ way. By also providing a similar risk/return profile to the two broad parent indices, investors can use our new ETFs to complement their core asset allocation or use them as replacement strategies.”
Matteo Andreetto, Head of SPDR for EMEA, adds: “Trends that have been bubbling under the surface for the last decade have now come to a head, making ESG a significant and central building block of a portfolio. In addition to this, large-scale wealth transfers from Boomers to their children, and a greater emphasis on living according to values, has encouraged ESG adoption.
“The investment industry is responding well to these trends, providing investors with more solutions to satisfy a growing appetite for ESG factors in portfolios.”
State Street Global Advisors has around USDUSD352.7 billion in ESG integrated assets and in terms of asset stewardship, its dedicated team engages with companies representing 72 per cent of State Street Global Advisors equity AUM. State Street Global Advisers has been implementing ESG since 1985.
Both the SPDR Bloomberg SASB Euro Corporate ESG UCITS ETF and the SPDR Bloomberg SASB US Corporate ESG UCITS ETF have TERs of 0.15 per cent.