Invesco launches a global ESG corporate debt ETF

Invesco announced today the launch of a global corporate debt ETF aimed at increasing exposure to investment-grade issuers with a strong ESG profile. The Invesco Global Corporate Bond ESG UCITS ETF seeks to expose itself to securities from corporate issuers from all developed markets, with weights adjusted based on certain ESG parameters.

The new Invesco ETF will try to replicate the Bloomberg MSCI Global Liquid Corporate ESG Weighted SRI Sustainable Bond Index, which is composed of fixed-rate taxable fixed income securities from global corporate issuers based in developed countries. To be included in the index, issuers must have an investment-grade rating, and both the principal and interest of securities denominated in dollars, euros, pounds sterling or Canadian dollars. The list of accepted currencies will be reviewed on an annual basis.

Sustainable Focus

The ESG-related goal will be achieved through a combination of exclusions and biases. Issuers will be removed from the index if they participate in certain business activities, have an MSCI ESG rating below BBB, or have faced very serious controversies related to ESG issues in the last three years. The index then uses MSCI ESG Ratings to bias allocations compared to their market values in the Global Aggregate Corporate Index, in addition to limiting the market value weighting of issuers to a maximum of 5%. The Index is rebalanced monthly.

Over the past five years, investors have increasingly used ETFs to gain exposure to fixed income markets. One of the main drivers of this acceleration in demand has been the launch of fixed income ETFs that pursue specific ESG objectives, particularly those that seek to improve ESG characteristics, while maintaining a risk-return profile similar to a non-ESG benchmark index.

The new Invesco ETF follows the same investment methodology as our IG Corporate Bond ESG ETFs in euros, pounds sterling and dollars, but applying a multi-currency approach. It may be attractive to ESG-sensitive investors, who are trying to take advantage of the yields currently offered by bonds and the potential of a favorable rate environment in the future, without assuming the risk of a specific currency or deviating too much from the characteristics of the standard benchmark index.

Laure Peyranne, Head of ETFs Iberia, LatAm & US Offshore at Invesco