Lyxor has entered the green space with the launch of what it claims to be the world’s first green bond exchange-traded fund (ETF).
The Lyxor Green Bond (DR) Ucits ETF, offers investors access to the investment grade green bond market.
Through the Solactive Green Bond EUR USD IG Index, the ETF gives investors access to a portfolio of 116 euro and dollar investment grade bonds.
The fund will carry a total expense ratio (TER) of 0.25%.
Green bonds are debt issues with a direct contribution to improving the environment. Their earnings are reserved for low-carbon and climate enhancing projects.
Although a small portion of the global debt universe, green bonds have raised $9.2 million (£7.5 million) in 2016.
The bonds have been issued by a multitude of different sources through sovereigns (Poland and France); sub-sovereigns (Stockholm County Council, New York MTA, City of Oslo, Province of Ontario); Corporates (Apple, EDF, Iberdrola, Toyota); supranationals (World Bank, IFC, European Investment Bank); and commercial Banks (Bank of China, Société Générale, Crédit Agricole CIB).
‘Our ETF is the first pure-play ETF on green bonds,’ said Adam Laird, head of ETF strategy, Lyxor.
‘We’re working with the Climate Bond Initiative, who will verify and review the projects financed by these green bonds. We think this is very important: there are plenty of “climate bonds” being issued by companies with green links, but the money isn’t used for eco projects.’
Arnaud Llinas, head of ETFs & indexing at Lyxor added: ‘Lyxor is committed to addressing the challenges of energy transition, and servicing the growing demand for responsible investments.’
Llinas noted this ETF marks the start to Lyxor’s ambition launch a full suite of innovative environmental, social and governance themed investments.