Active Bond ETF Has ESG Focus

Today, Pimco rolled out a first of its kind ETF that takes an actively managed ESG approach to short-term debt. The PIMCO Enhanced Short Maturity Active ESG ETF (EMNT) leverages PIMCO’s expertise in the fixed income space and the environmental, social and governance investment space.

EMNT comes with an expense ratio of 0.24% and lists on the NYSE Arca.  

“This active ETF is designed to provide capital preservation, daily liquidity and attractive return potential to investors who seek to invest in companies with best-in-class ESG practices,” said PIMCO Managing Director and head of Short-Term Portfolio Management Jerome Schneider, who manages EMNT.

Portfolio

The fund targets money market investments and short-term debt securities selected based on PIMCO’s in-house ESG framework. The securities are selected for their high quality as well as their environmental processes, their corporate governance practices and their social policies, according to the press release.

EMNT is expected to have an average duration of one year or less, while its dollar-weighted average maturity is expected to be three years or less, the prospectus says.

According to the prospectus, PIMCO uses a variety of in-house and external methods to evaluate a company’s ESG status as well as engaging with issuers of fixed income about improving their ESG practices. EMNT’s portfolio will also automatically exclude issuers that are significantly involved in the alcohol, tobacco, defense, gambling, coal and pornography industries.  

The closest competitor to EMNT is the $150 million iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB), which charges an expense ratio of 0.12%. SUSB relies on MSCI’s ESG research and is index-based.

Contact Heather Bell at [email protected]