ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Dual Impact Channel
  2. ESGB Is the Right Bond ETF for Net-Zero Transition
Dual Impact Channel
Share

ESGB Is the Right Bond ETF for Net-Zero Transition

Tom LydonJul 08, 2022
2022-07-08

The universe of environmental, social, and governance (ESG) fixed income exchange traded funds is expanding, and while bonds are currently out of fashion due to interest rate tightening by the Federal Reserve, it could be an ideal time for investor to build watchlists of ESG bond ETFs.

One fund worthy of that consideration is the IQ MacKay ESG Core Plus Bond ETF (ESGB B-). ESGB, which recently turned a year old, is actively managed. That’s a plus at a time of interest rate duress, but it could be beneficial for ESG-focused investors because traditional aggregate bond strategies don’t make intentional ESG efforts.

ESGB is also pertinent at a time when more companies and governments are committing to net-zero goals and as more investors are scrutinizing exactly how funds are credibly addressing the renewable energy transition.

“Navigating the transition in a portfolio requires taking a view on: 1) how fast the transition will be; 2) how to mitigate for volatility and possible supply constraints along the way; and 3) the extent to which the transition path is already reflected in market pricing,” according to BlackRock research.

Obviously, many bond investors are looking to avoid volatility. Perhaps coincidentally, bonds — both corporates and sovereigns — with favorable ESG traits are often less volatile than counterparts that could be vulnerable to ESG controversies.

On that note, ESGB is a highly relevant consideration because its managers focus on “eliminating uncompensated risk,” according to the issuer.

“Those companies that are better prepared and more able to benefit should be perceived as lower risk and could enjoy a lower cost of capital. Their future expected cashflows may be valued more highly. That would mean, all else equal, the prices of those assets should go up. That effect is reinforced as investor preferences shift towards greener assets. As the repricing unfolds, owners of those assets could potentially earn higher returns than they would otherwise,” added BlackRock.

Owing to a Treasury-heavy portfolio, credit risk is minimal with ESGB, as the fund allocates about 58% of its weight to bonds rated AAA, AA, or A. ESGB sports a 30-day SEC yield of 3.80%, according to issuer data. That’s confirmation that income investors need not sacrifice income in an effort to pair ESG principles with bonds. An annual fee of 0.39%, or $39 on a $10,000 investment, is also favorable among active fixed income ESG strategies.

For more news, information, and strategy, visit the Dual Impact Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X