The VanEck Vectors Green Bond ETF (NYSEArca: GRNB), the first fixed income exchange traded fund offering exposure to green bonds, is getting less expensive for investors to own following a recent fee cut.
GRNB’s annual expense ratio has been reduced to 0.30%, or $30 on a $10,000 investment, from 0.40%. The new expense ratio went into effect on Sept. 1st.
Green bonds are debt securities issued to finance projects that promote climate change mitigation or adaptation or other environmental sustainability purposes. The new breed of green bonds gained momentum in global market ever since the European Investment Bank issued the first green bond in 2007.
GRNB tracks the S&P Green Bond Select Index, which is “comprised of labeled green bonds that are issued to finance environmentally friendly projects, and includes bonds issued by supranational, government, and corporate issuers globally in multiple currencies,” according to VanEck.
GRNB Details
GRNB holds 133 bonds and has an effective duration of 6.38 years.
“Investors are increasingly incorporating environmental and social factors into their investment process, alongside traditional financial risk and return metrics,” said Ed Lopez, Head of ETF Product with VanEck, in a statement. “There is increasing recognition that incorporating these factors may result in better long-term investment outcomes. This fee reduction will allow investors to build sustainable fixed income portfolios that have a positive environmental impact, without a significant impact to their risk and return profile.”
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.
GRNB has a 30-day SEC yield of 1.38%. The fund is down 4.08% year-to-date.
For more information on the fixed-income markets, visit our bond ETFs category.