By Clayton Fresk, Stadion Money Management
It was only a matter of time before the ESG trend that the market has seen in Equity ETFs crossed over into the fixed income realm. iShares recently issued two ESG ETFs in the corporate bond space:
These ESG ETFs “… seek to provide exposure to the broad investment-grade corporate bond market while aligning environmental, social, and governance objectives – like low emissions, privacy/data security and ethical business practices.”
Looking at some historical performance, it appears both ETFs do not stray far from their non-ESG brethren. This first chart below compared the index for SUSC (BESFTRUU) to that of the broad-based corporate bond index (LUACTRUU) since the inception of the ESG index.
There has been little dispersion between the ESG index and the non-ESG index – overall the performance differential has been approximately 3 basis points (bps) per year. This is not by happenstance, as it was the intent of the index provider based on the construction parameters: