BlackRock has cross-listed the iShares JP Morgan ESG $ EM Bond UCITS ETF on SIX Swiss Exchange and added an additional share class on Xetra.
BlackRock has listed new share classes of iShares JP Morgan ESG $ EM Bond UCITS ETF on Six Swiss Exchange and Xetra.
The ETF provides exposure to sovereign and quasi-sovereign bonds from emerging market issuers that adhere to high environmental, social, and governance (ESG) standards.
On Zurich’s SIX exchange, investors can now access the fund in euro hedged (GMES SW), non-hedged, euro, accumulating (EMSA SW) and non-hedged, US dollar, distributing (EMES SW) share classes.
For investors on Xetra, the new share class hedges currency risk relative to the euro with income capitalized. It trades under the ticker SLMG GY.
The fund’s currency-hedged share classes come with an expense ratio of 0.50%, while its unhedged versions (also available on London Stock Exchange and Euronext Amsterdam) cost 0.45%.
The fund has $565m in assets across all share classes.
Fund methodology
The underlying reference index for the fund is the JP Morgan ESG EMBI Global Diversified Index, which tracks fixed and floating-rate debt instruments denominated in US dollars from emerging market issuers with at least 2.5 years remaining to maturity and a face value of at least $500 million outstanding.
A country is classified as an emerging market by JP Morgan if its gross national income per capita is below $18,769 and its long-term foreign currency sovereign credit rating is below investment grade at A-/A3 for three consecutive years. A country loses its EM status if its GNI per capita rises above this ceiling or if its credit rating is A- or above for three consecutive years.
The methodology applies an ESG scoring and screening process based on data from Sustainalytics and RepRisk to tilt the index towards green bond issues or issuers ranked higher on ESG criteria, and to underweight or remove issuers that rank lower.
As of 22 November 2019, the index provides exposure mainly to sovereign issuers (89.3%) with the remaining allocation in quasi-sovereign bonds. The largest country exposures are Uruguay (4.7%), United Arab Emirates (4.4%), Indonesia (4.1%), Panama (4.2%), and Saudi Arabia (4.1%).
Bonds rated “BBB” make up the largest credit quality bucket in the index with a weight of 37.7%, followed by bonds rated “B” (22.3%), “BB” (16.2%), and “A” (13.3%). The index has an effective duration of 7.8 years and is currently yielding 4.5%.