UBS Asset Management’s Sustainable Development Bank Bonds UCITS ETF reaches USD1bn in assets
UBS Asset Management’s Sustainable Development Bank Bonds UCITS ETF, the first UCITS ETF to invest in bonds issued by multilateral development banks, has passed USD1 billion in assets under management.
The ETF has attracted strong demand from investors who want to access a high grade USD bond exposure with a strong sustainability profile.
The funds raised by development banks, such as the World Bank Group, finance projects aimed at alleviating poverty, improving infrastructure, protecting the environment, and bringing social benefits. Their activities can be seen as impact-investing, which attracts strong demand from sustainable investors.
Development banks provide a high level of transparency on their activities and their projects are closely aligned with the UN’s Sustainable Development Goals (SDGs). Recently, they have helped address the adverse impact of the Covid-19 crisis on developing economies. The World Bank alone expects to deploy up to USD160 billion to this end until June 2021.
From a financial perspective, multilateral development banks’ bonds included in the ETF have very good creditworthiness certified by AAA ratings from Moody’s, S&P and Fitch. That is possible thanks to strong support from shareholders and their so-called “preferred creditor status”, which means they have priority over any other creditors.
The ETF can be deployed as a sustainable replacement for USDhigh grade bond exposure, which forms a large portion of typical fixed income allocations. It can improve the sustainability profile of a portfolio and offers a slightly higher yield compared to duration-matched US Treasuries.
Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management, says: “Our clients see development bank bonds as an attractive means of improving the sustainability profile of their portfolios while supporting high-impact development projects across the world. It is their commitment to sustainability which has helped this product reach the USD1 billion milestone. We as UBS ETF continue to innovate in this area with recent launches of Climate Aware and Paris-aligned ETFs.”
The Sustainable Development Bank ETF is one of a growing suite of ESG ETFs offered by UBS Asset Management, one of the largest European provider of ESG ETFs, with USD28 billion in asset under management.
The UBS ETF Sustainable Development Bank Bonds UCITS ETF is listed on five exchanges (SIX Swiss Exchange, Xetra, Borsa Italiana, London Stock Exchange, Mexican Stock Exchange) and offered in three currency-hedged share classes (EUR, CHF and GBP), as well as in the unhedged USDshare class.