Nuveen launches new ESG bond ETF

Oct 2nd, 2017 | By | Category: Fixed Income

Nuveen has expanded its line of environmental, social and governance (ESG) ETFs with the launch of the NuShares ESG US Aggregate Bond ETF (NYSE Arca: NUBD). The fund is the first ETF to offer broad exposure to the US investment grade fixed income market while adhering to certain ESG constraints.

Nuveen launches new ESG bond ETF

Neveen already offers seven ESG ETFs, although NUBD becomes the first to offer exposure to fixed income with an ESG screen.

The ETF tracks the Bloomberg Barclays MSCI US Aggregate ESG Select Index, which utilises a selection methodology created in conjunction with TIAA Investments, one of the largest managers of responsible investment assets in the US across multiple asset classes.

Martin Kremenstien, senior managing director and head of ETFs, Nuveen, commented: “We are pleased to offer investors the opportunity to build a full asset allocation portfolio that incorporates RI principles and helps to align their full portfolio with their values in a transparent, tax-efficient and low-cost solution.”

The index is composed of US investment grade fixed income securities, including US government securities, debt securities issued by US corporations, residential and commercial mortgage-backed securities, asset-backed securities and US dollar-denominated debt securities issued by non-US governments and corporations that are publicly offered for sale in the US.

To be eligible for inclusion, securities must satisfy certain ESG and low-carbon criteria, as determined by TIAA’s proprietary research and ESG factor models.

Amy O’Brien, managing director & head of responsible investment at TIAA Investments, commented: “Our experience managing ESG fixed income investments dates back to 1990. We are pleased to leverage that deep body of knowledge, the talents of our dedicated ESG fixed income analysts and traders and expertise from across our asset management complex to offer a competitive and innovative ESG fixed income solution to investors.

It is currently heavily weighted towards AAA-rated securities which make up 72.0% of the portfolio, while AA-, A- and BBB-rated securities comprise 5.2%, 11.8% and 11.0% respectively. US Treasuries are the largest sector represented in the index with a 37.1% weight, followed by securitized debt (30.5%), corporate debt (25.4%) and government-related debt (7.1%).

The fund has an expense ratio of 0.20%.

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