BlackRock to Shift Corporate Bond to ESG Index

Published on:
by KnowESG
Blackrock Shopping Centre

In response to investor demand, BlackRock intends to convert a €1.4 billion iShares corporate bond exchange-traded fund to an environmental, social, and governance index. At an extraordinary general meeting recently held, the world's largest asset manager has requested shareholders of its Dublin-domiciled iShares € Corp Bond ex-Financials Ucits ETF to accept an index modification to the Bloomberg MSCI Euro Corporate ex Financials Sustainable SRI.

The ETF, launched in 2009, presently tracks the Bloomberg Barclays Euro Corporate ex-Financials Bond index. It plans to shift to the new sustainable index by the half of May, subject to shareholder approval and will have an ESG tag added to it.

The ETF will be categorised as an article eight fund under the EU's Sustainable Finance Disclosure Regulation.

BlackRock said the decision comes in response to increased investor demand for evolving the existing sub-fund to adopt ESG features while maintaining broad market exposure.

The asset manager said, "We believe that where enhancements can be made to improve the ESG characteristics of a portfolio while continuing to provide a similar or improved risk/return profile, such enhancements are in the best interest of investors,”

The company said the ETF's overall expense ratio, which is now 0.2 per cent, will not be changed.

Several iShares products were altered by the US mutual fund giant. DWS and BNP Paribas Asset Management, for example, have swapped benchmarks on several of their ETFs.

Recently, fund selectors have raised worries about passive funds changing. Experts have warned that not all are on the same ESG journey. Switching underlying indices might result in a loss of confidence.

BlackRock: Why The Finance Industry Is Hesitant To Ramp Up ESG Efforts

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