BlackRock adds ESG and smart beta high yield, investment grade funds

By Susanna Moon

Chicago, July 13 – BlackRock is launching four new fixed-income exchange-traded funds in two new categories: smart beta and ESG, or environmental, social and corporate governance.

“With record first half inflows of $84 billion year to date, investors are increasingly using bond ETFs to access the global fixed income market,” according to an announcement.

The smart beta funds will consist of the iShares Edge Investment Grade Enhanced Bond ETF and the iShares Edge High Yield Defensive Bond ETF.

The smart beta approach to corporate bond investing “blend[s] two rewarded and diversifying fixed income factors – quality and value – that seeks to mitigate risk while providing enhanced returns,” the release noted.

“HYDB seeks to be more defensive overall than the broad high yield corporate market and IGEB offers the potential for a higher yield than the broad investment grade corporate market,” the company noted.

The funds also introduce BlackRock’s first self-indexed funds, which are based on “unique intellectual property and leverage BlackRock’s analytics and modeling capabilities.”

BlackRock said it plans to use self-indexing strategies “in areas where the firm’s leading intellectual property and longstanding fixed income market experience can add distinct incremental value to clients.”

Meanwhile, the ESG funds are the iShares ESG USD Corporate Bond ETF (SUSC) and the iShares ESG 1-5 Year USD Corporate Bond ETF (SUSB).

The ESG funds track benchmarks based on Bloomberg/Barclays and MSCI and will aim for risk and return characteristics similar to that of the traditional benchmark but with a higher ESG score.

“We launched the industry’s first bond ETFs fifteen years ago, giving investors exposure to Treasuries and U.S. investment grade corporate bonds for the first time in an ETF,” Martin Small, U.S. head of iShares at BlackRock, said in the company’s press release. “Now we want to provide a solution for investors seeking access to fixed income through an ESG lens.”

“These new products are the first exposures of their kind in an ETF wrapper and complement iShares existing ESG suite.”

BlackRock is an investment management firm based in New York.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.