The Invesco Global High Yield Corporate Bond ESG UCITS ETF was launched following observations that bond funds saw almost 40% of ETF inflows in 2022, while ESG ETFs continued 60% of overall market flows.
Invesco said that it expected both themes to continue into this year, but with “potentially greater demand for corporate bond exposures”.
The ETF tracks the Bloomberg MSCI Global High Yield Liquid Corporate ESG Weighted SRI Bond index, which uses both exclusionary filters and tilts towards overweight issuers with a strong ESG profile.
Invesco added that the fund follows a similar methodology to its investment-grade corporate bond ESG ETFs, but with a focus on global high yield.
Securities are excluded from the index if they have an MSCI ESG rating below BB, have faced very severe controversies pertaining to ESG issues over the last three years, or are involved in various sectors such as alcohol or tobacco.
The fund is Invesco’s 26th fixed income ETF, which now make up over 20% of the firm’s ETFs, and has an annual charge of 0.25%.
Paul Syms, head of EMEA fixed income ETF product management at the firm, said: “Demand for fixed income ETFs has grown substantially in recent years, partly the result of greater understanding from investors but also because of the availability of new products.
“Government bonds took the lion’s share of fixed income assets in 2022, with the Invesco US Treasury Bond 7-10 Year UCITS ETF leading the pack with $3.3bn of net new assets.
“We believe the pick-up in corporate bond flows seen towards the end of the year could continue in 2023 as a change in Fed focus away from fighting inflation and towards stimulating growth may support credit and high yield.”
