BlackRock says the new fund comes in response to growing demand for investments that incorporate environmental, social and governance (ESG) factors.

The New York-headquartered investment management giant has added a bond exchange-traded fund to its sustainable product range.

The new iShares Euro Corporate Bond Sustainability Screened 0-3yr UCITS ETF (SUSE) tracks the Barclays MSCI Euro Corporate 0-3 year Sustainability ex-Controversial Weapons Index. It will invest in short-term euro-denominated investment grade bonds issued by corporates with an ESG rating of BBB or above, as determined by MSCI, from across Europe, the Americas and Asia-Pacific. 

The index excludes debt from companies that are involved with controversial weapons, including cluster bombs, land mines and chemical and biological weapons.

“Investors are placing greater emphasis on transparency and the ESG practices of companies, regardless of whether they are investing in the company’s equity or debt. ETFs are one of the investment products of choice because they are easy to use and investors can see the process and methodology in selecting social and environmental characteristics, all implemented in a single trade,” said Hannah Skeates, iShares global head of sustainable investments at [tag\BlackRock">BlackRock.

“This is our first move into sustainable bond ETFs. It complements our European-domiciled sustainable equity ETFs, which has amassed almost $$500 million. Combined with the active and index funds within the BlackRock range, investors now have more choice for expressing their traditional investment views whilst taking into account the impacts of investment choices.”

The fund has a total expense ratio of 0.25 per cent.

BlackRock manages more than $200 billion of assets across ESG screened and impact funds globally.