GRNB, which debuted in March, has $5.1 million in assets under management and a 30-day SEC yield of almost 1.1%. The ETF holds 41 green bonds. Most of GRNB’s holdings, about 93% of which are rated investment-grade, have maturities ranging from one year to 10 years.
With green bonds, traditional fixed-income investors do not need to sacrifice much as this new breed of debt securities are very closely and highly correlated to conventional bonds, providing income and relative safety, compared to other riskier assets.
“For issuers, the green bond market provides an opportunity to diversify funding sources,” adds Fitch. “The rarity of green bonds and the dominance of dedicated buy-and-hold investors focused on the sustainable and responsible segment sometimes drive pricing tighter than for comparable instruments by the same issuer. Issuing green bonds can be seen by investors as an indication that the issuer is cognisant of environmental matters which could affect their business in the longer term.”
Green bonds also often feature low correlations to other fixed income assets, a possible advantage for income investors at a time of diverging monetary policies throughout much of the developed world.
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