Fidelity Launches Two New Article 9 Paris-Aligned Corporate Bond ETFs
Investment management firm Fidelity International announced the launch of two new climate-focused fixed income ETFs, the Fidelity Sustainable EUR Corporate Bond Paris Aligned Multifactor UCITS ETF (FUIG) and the Fidelity Sustainable USD Corporate Bond Paris Aligned Multifactor UCITS ETF (FEIS) marking an expansion of the firm’s sustainable corporate bondfund lineup.
Indices that are labelled as Paris-aligned Benchmarks (PABs) under EU rules must meet criteria for asset selection that results in the index aligning with the long-term climate goals of the Paris Agreement. Criteria include a minimum reduction in greenhouse gas (GHG) emissions intensity of at least 50% compared to the market index, with annual GHG emissions intensity reductions of at least 7%, among others.
The new funds are classified as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) indicating that they have sustainable investment as their objective.
Stefan Kuhn, Head of ETF Distribution, Europe, at Fidelity International, said:
“Since its launch in 2021, our Sustainable Global Corporate Bond Multifactor UCITS ETF has proved popular with clients, utilising Fidelity’s active research platform and our sustainability expertise to identify best-in-class corporate bonds at an attractive price point. We are pleased to expand on this to include regional variations of the successful strategy, in line with client demand.”
The new EUR and USD indices are benchmarked against the Solactive Euro Corporate IG PAB Index and the Solactive USD Corporate IG PAB Index, respectively. The indices provide exposure to portfolios of investment grade corporate debt portfolios that are in line with a 1.5°C scenario through 2050, based on ISS ESG climate analysis, while demonstrating similar credit and interest rate characteristics compared to the Solactive Euro IG Corporate Index and the Solactive USD IG Corporate Index, respectively.
The ETFs also exclude companies deriving more than 10% of their revenues from fossil fuel-related activities, including production, exploration, distribution, and services, companies generating over 50% of their revenues from fossil fuel-based electric power generation or those that are involved in tobacco production, controversial weapons, and violations of the UN Global Compact.
Both funds are now listed on the London Stock Exchange, Deutsche Börse, and Euronext Milan.
The asset manager in March launched the Fidelity Global Government Bond Climate Aware UCITS ETF, tracking the Solactive Paris Aware Global Government USD index, which offers exposure to the performance of global local currency bonds of investment grade countries. In November 2022 it launched two other climate-focused, Solactive-benchmarked solutions: The Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF, tracking the Solactive Paris Aligned Global Corporate High Yield USD index, and the Fidelity Sustainable Global Corporate Bond Paris-Aligned Multifactor UCITS ETF tracks the Solactive Paris Aligned Global Corporate USD.
Timo Pfeiffer, Chief Markets Officer at Solactive, said:
“Climate change represents one of the most significant challenges of our era, leading to a growing need for climate-conscious investment strategies. As we work towards a more sustainable planet, Solactive is dedicated to the continued development of investment solutions that cater to that. We are delighted that Fidelity shares this commitment and has selected Solactive as the index provider for their latest product. Our track record in active investments spans several years, and we very pleased to be now consolidating it also within the fixed-income arena.”