UBS Launches First Sustainable Bond ETF

UBS has launched its first exchange traded fund (ETF) which focuses on so-called sustainable corporate bonds issued in the U.S., widening product choice for passive and ethical investors.

The UBS Barclays MSCI US Liquid Corporates Sustainable UCITS ETF (ticker UC98 in Sterling and UC97 in US dollar) has listed on the London Stock Exchange and has annual fees of 0.20 percent. Current assets in the fund stand at $37 million.

It physically tracks an index of fixed-rate, investment grade, USD-denominated bonds from the U.S. which have an environmental, social and governance (ESG) rating of BBB or higher from indexer MSCI. All the underlying bonds come from financial, industrial and utility sectors. The bonds also must meet certain criteria on maturity, credit quality and liquidity. Each issuer has a cap of 5 percent of the total market value.

Andrew Walsh, head of UBS ETF sales UK and Ireland, said demand for ethical investments continues to grow across both equities and fixed income.

“Our new ETF listing is a reflection of meeting clients' needs for an easy to access US corporate bond product that tracks an index which screens for companies which have strong ESG profiles,” he said.

This launch follows the recent listing of the UBS MSCI Japan Socially Responsible UCITS ETF, which costs 0.40 percent. Deka in Germany also listed an ESG-friendly ETF that tracks European equities for 0.40 percent in August.