Deutsche Asset Management Launches ESG-Focused ETF

Josh O'Neill

13 February 2017

has launched a fixed income exchange-traded fund with an environmental, social and corporate governance-focused exposure to the euro-denominated corporate bond market.

The DB X-Trackers II ESG EUR Corporate Bonds UCITS ETF tracks an index of corporate debt filtered only to include companies that meet certain sustainability, social and corporate governance requirements, Deutsche Bank AM said in a statement earlier this week.

The physical replication ETF tracks the Bloomberg Barclays MSCI Euro Corporate Sustainable and Socially Responsible Investment (SRI) Index, which, according to Deutsche Bank AM, has similar yield and duration to its non-SRI equivalent, with a correlation rate exceeding 99 per cent.

To be included in the index, bonds must be investment-grade rated and have an amount outstanding of at least €300 million ($320.4 million), while also meeting sustainability and SRI requirements.

The Frankfurt-headquartered bank's new ETF has an annual all-in fee of 0.25 per cent and is listed on the Deutsche Börse.

“The provision of environmental, social and corporate governance investment solutions is an essential part of Deutsche Asset Management’s overall offering. More investors are starting to access fixed income exposure using ETFs, so it is important to have ESG-focused bond exposure available in ETF form alongside our existing solutions,” said Petra Pflaum, Deutsche AM’s chief investment officer for responsible investments.