With more investors looking to apply socially responsible and sustainable principles throughout portfolios, fixed income offerings are becoming a bigger part of that equation. The VanEck Vectors Green Bond ETF (NYSEArca: GRNB), the first fixed income exchange traded fund offering exposure to green bonds, is one fund that can help with that objective.
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.
“For investors seeking to achieve both sustainability and financial objectives, green bonds have emerged as an important bridge to the UN Sustainable Development Goals (SDGs),” said VanEck in a recent note. “The SDGs represent a globally agreed upon framework that can help investors understand and measure how their portfolios are contributing to addressing critical global sustainability issues.”
Exploring Green Bonds
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.
The ETF debuted just over 18 months ago and holds 171 green bonds. GRNB has an effective duration of 6.50 years.