Goldman Sachs Asset Management has launched a new municipal bond ETF that includes a significant allocation to securities funding projects with positive social and environmental impacts.
Goldman Sachs has launched a new municipal bond ETF that includes a significant allocation to green and social bonds.
The Goldman Sachs Community Municipal Bond ETF (GMUN US) has been listed on NYSE Arca with an expense ratio of 0.25%.
The fund is linked to the Bloomberg Goldman Sachs Community Municipal Index which is constructed primarily from a universe consisting of investment-grade municipal securities with remaining maturities between one and ten years.
The methodology aims to create an index that is focused on fostering community initiatives and investing in essential services including education, healthcare, and clean water.
It does this through two exclusionary screens based on ‘source of funds’ and ‘use of proceeds’. The first screening step removes bonds funding projects that are also being significantly funded through auto parking revenue, casino revenues, fuel sales tax, highway tolls, lottery revenue, natural gas revenue, oil & gas royalties, nuclear power, betting revenues, port, airport, and marina revenues, tobacco and liquor taxes, and severance tax.
The second screen removes bonds whose proceeds are to be used for casinos, correctional facilities, highways, lawsuits & settlements, natural gas utilities, parking facilities, nuclear power plants, port, airport & marinas, oil, gas, or coal operations, and steel manufacturing.
To further boost the index’s sustainability profile, the methodology also includes bonds with remaining maturities of up to 15 years which have officially been designated as ‘green’ or ‘social’.
Constituents are weighted by market value in the index which is rebalanced on a monthly basis.
As of the end of 2022, the index was exhibiting a yield to maturity of 3.32%, a yield to worst of 2.97%, and an effective duration of 3.79 years.
Over half (56.7%) of the index was allocated to bonds rated AA with other significant credit bucket exposures being AAA (20.4%), A (17.8%), and BBB (5.1%).
Notable state exposures included California (19.4%), New York (14.7%), Texas (7.1%), Illinois (4.8%), and Massachusetts (4.3%).