Nuveen is expanding on its socially responsible ETF theme, but its new offering will help fixed-income investors pair their bond investment needs with environmental, social and governance principles.
On Monday, Nuveen launched the NuShares ESG U.S. Aggregate Bond ETF (NYSEArca: NUBD). NUBD has a 0.20% expense ratio.
“We are pleased to offer investors the opportunity to build a full asset allocation portfolio that incorporates RI principles and helps to align their full portfolio with their values in a transparent, tax-efficient and low-cost solution,” Martin Kremenstein, Senior Managing Director and Head of Exchange-Traded Funds at Nuveen, said in a note.
The ESG U.S. Aggregate Bond ETF will try to reflect the performance of the Bloomberg Barclays MSCI US Aggregate ESG Select Index, which screens for certain environmental, social and governance, or ESG, criteria when selecting from securities taken out of the benchmark Bloomberg Barclays US Aggregate Bond Index, a broadly designed index that captures U.S. investment-grade, taxable fixed income securities.
Environmental assessment categories can include a company’s impact on climate change, natural resource use, and waste management and emission management. Social evaluation categories can include a company’s relations with employees and suppliers, product safety and sourcing practices. Governance assessment categories can include governance practices and business ethics, according to the prospectus.
The ESG criteria also consider how a company follows national and international laws and regulations, along with commonly accepted global norms related to ESG matters. The underlying index exclude companies with significant activities in certain controversial businesses, including those involving alcohol, tobacco, nuclear power, gambling, and firearms and other weapons.
Furthermore, U.S. and non-U.S. governments receive an ESG rating based on the government issuer’s performance on six ESG risk factors: Natural Resources, Environmental Externalities & Vulnerability, Human Capital, Economic Environment, Financial Governance and Political Governance.
“Our experience managing ESG fixed income investments dates back to 1990. We are pleased to leverage that deep body of knowledge, the talents of our dedicated ESG fixed income analysts and traders and expertise from across our asset management complex to offer a competitive and innovative ESG fixed income solution to investors,” Amy O’Brien, managing director and head of Responsible Investment at TIAA Investments, said in a note.
Related: MSCI Introduces Factor-Based ESG Benchmarks
Credit quality breakdown include AAA 72.0%, AA 5.2%, A 11.8% and BBB 11.0%.
Industry sector allocations include U.S> Treasury 37.1%, securitized 30.5%, corporate debt 25.4% and government related 7.1%.
NUBD currently shows a yield to worst of 2.35% and an effective duration of 5.77 years.
For more information on new fund products, visit our new ETFs category.