On Tuesday, IndexIQ announced the launch of its newest ETF – the IQ MacKay ESG Core Plus Bond ETF (ESGB). The Fund focuses on investment in securities within the core bond universe that satisfy environmental, social, and governance (ESG) criteria developed by MacKay Shields (MacKay), a fellow New York Life Investments boutique and a global asset manager focused on fixed income and equity investing.
ESGB is an actively managed strategy that seeks total return across a broad portfolio of fixed income securities while incorporating MacKay’s ESG analysis framework. The portfolio prioritizes issuers that demonstrate strong performance relative to peers across certain ESG metrics through selection and portfolio construction.
MacKay’s Senior Portfolio Managers in Global Fixed Income Stephen Cianci, Neil Moriarty, Alexandra Wilson-Elizondo, and Joseph Cantwell, serve as Co-Portfolio Managers of ESGB. The Global Fixed Income team collectively has more than $40 billion in assets under management as of May 31, 2021, and a long-standing track record managing fixed income strategies across the globe. With proprietary research at the core of MacKay’s approach to active management, the team utilizes an investment process that combines fundamental bottom-up research and top-down macroeconomic analysis with robust ESG elements.
Janelle Woodward, President of MacKay Shields, commented: “As adoption and demand for ESG investment strategies grow in the fixed income marketplace, we saw a valuable opportunity to reflect our best thinking around ESG inclusion with ESGB, aligning the breadth of our internal research with our total return investment approach. Through the alignment of ESG values with our stakeholders, in our view, ESGB can serve as a preferred solution for potential income generation and capital appreciation for both retail and institutional investors.”
Sal Bruno, CIO of IndexIQ, added: “With the launch of ESGB, we’re excited to expand our existing ESG ETF lineup by building upon our partnership with MacKay Shields. We believe investors will recognize the potential benefits of working with a proven portfolio management team and investing in a fund that seeks to provide them broad fixed income exposure in the core bond category with an ESG lens that many investors value in their portfolios.”
ESGB’s Investment Focus
ESGB invests at least 80% of its assets in debt or debt-related securities, including government bonds, corporate bonds, mortgage, and other asset-backed securities, and could include fixed or floating rates of interest. The Fund will generally seek to maintain a portfolio modified duration within 2.5 years (plus or minus) of the duration of the Bloomberg Barclays U.S. Aggregate Bond Index. Additionally, ESGB will invest at least 80% of its assets in securities that meet MacKay’s proprietary ESG methodology standards.
The Fund joins IndexIQ’s solutions-driven ETF family and comes as an expansion of its actively managed fixed income lineup with MacKay, which includes the IQ MacKay Muni Insured ETF (MMIN) and the IQ MacKay Municipal Intermediate ETF (MMIT). ESGB also illustrates IndexIQ’s expansion of thoughtful ESG-focused offerings, including the IQ Healthy Hearts ETF (HART), the IQ Candriam ESG US Equity ETF (IQSU), and the IQ Candriam ESG International Equity ETF (IQSI).
For additional information on IndexIQ, visit newyorklifeinvestments.com/etf
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