Fidelity Launches Three New ESG ETFs

Fidelity added to its selection of sustainable funds last week with three new ESG ETFs. Based on US, European and Global MSCI indices respectively the sustainable research enhanced equities: FUSR, FEUR and FGLR will be actively managed with OCF’s of around 0.3%.

The selection of stocks will be made based upon Fidelity’s own sustainability ratings, similar to UBS’ recent global credit ETF. They are to contain 250-300 stocks and will be updated every quarter. The funds have already listed on both the London Stock Exchange and the Deutschen Börse Xetra.

Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity International, said: “Sustainable investing has proven to be one of the most significant shifts in asset management in a generation, heightened by increasing evidence that ESG investing can enhance financial returns.”

“This trend was reaffirmed in our own research where stocks with higher ESG ratings outperformed lower-rated stocks during the recent Covid-19 induced market sell-off. In line with our fiduciary duty and in response to our clients’ demands, we have been substantially increasing our focus on sustainable investment over recent years, including the launch of our Sustainable Ratings and Sustainable Family fund range.”

PGIM Announces New Corporate ESG Bond Fund

On the 29th of July last week, PGIM launched its first non-US ESG UCTIS fund with $25m seeding. It is pegged against the Bloomberg Barclays Global Aggregate Corporate Total Return index, screened through PGIM’s ESG ratings. These ESG ratings are assigned by its team of more than 110 analysts and are overseen by its ESG committee. The new PGIM Global Corporate ESG Bond Fund is designed to emphasize higher rated ESG issuers than the traditional corporate bond portfolios.

The PGIM Global Corporate ESG Bond Fund seeks total return, comprised of current income and capital appreciation in excess of its benchmark, the Bloomberg Barclays Global Aggregate Corporate Total Return Index—while focusing on ESG principles. The Fund invests in a diversified portfolio including investment-grade and high-yield corporate bonds, and quasi-sovereign bonds globally, denominated in U.S. dollars, euro, yen, sterling or in emerging market currencies.

Edward Farley, head of the European Investment Grade Corporate Bond team commented: “As a fundamental research-focused manager, we fully recognize the importance of integrating ESG factors in our global investment research, decision making and portfolio management and believe that ESG issues can affect the performance of investment portfolios. Our investment approach emphasizes and actively seeks to identify companies with sustainable, long-term competitive advantages. Within this context, we take into consideration governance, ethics, and overall social and environmental impacts. We consider relevant ESG factors in our investment process to work toward our ultimate fiduciary duty—searching for the highest risk adjusted returns for our clients.”

  1. Fergus Horsfall, Citywire June 2020
  2. Institutional Asset Manager June 2020