FTSE Russell has unveiled two new series of fixed income indices designed for socially responsible investors.
Scott Harman, Global Head of Fixed Income at FTSE Russell.
Inspired by existing strategies in corresponding equity indices, the new index series include the FTSE Fixed Income Global Choice Indices and the FTSE Fixed Income Excluding Fossil Fuels Enhanced Indices.
Each series is based on investment-grade debt denominated in multiple currencies and sourced from multiple fixed income sectors globally. Sub-indices based on currency, maturity, or credit rating are available on request.
The indices may be used as performance benchmarks or as the basis for index-linked investment products such as ETFs.
The FTSE Fixed Income Global Choice Indices select issuers based on the impact of their conduct and products on society and the environment. The methodology removes issuers involved in non-renewable energy, vice products, and weapons, as well as those deemed to be violators of UN Global Compact principles.
The FTSE Fixed Income ex Fossil Fuels Enhanced Indices, meanwhile, exclude issuers with certain exposure to fossil fuels as well as those involved in controversial business activities or conduct.
Scott Harman, Global Head of Fixed Income at FTSE Russell, commented: “Our new FTSE Russell indices address a growing need for sustainable investment solutions in the fixed income market. As investors look to align their portfolios with their ESG values, we have developed a thorough methodology to enable investors to exclude issuers based on their conduct or product involvement in specific sectors. Our experience in the equity market has allowed us to develop a methodology inspired by our FTSE Global Choice and FTSE Ex Fossil Fuel series, bringing consistency for investors across our equity and fixed income offering.”
The two new series complement the existing FTSE Impact Bond Indices which track the performance of ‘Impact Bonds’, bonds with proceeds that are used to support positive environmental or social benefits. These indices leverage the expertise of the Climate Bonds Initiative to identify green bonds that support the climate goals of the Paris Agreement, and utilize data from Refinitiv to identify bonds aligned with the International Capital Markets Association’s Social Bond Principles (SBP) or Sustainability Bond Guidelines (SBG).