New Bond Fund Helps Investors See Different Kind of Green
• Will invest in $170 billion universe of global securities
• More than 15 ETFs with similar ethos started in the last year
By Rachel Evans
Investors who want to make a difference with their money now have a new way to do it: an exchange-traded fund (ETF) that invests in global green bonds. Van Eck Associates Corp., which manages more than $40 billion, is starting the first debt ETF designed for those who want to help the planet. The fund will begin by investing in about 40 securities issued to finance environmentally sustainable projects, according to Ed Lopez, head of ETF product management and marketing at Van Eck. There are at least $170 billion of green bonds outstanding, data compiled by Bloomberg show.
ETFs that pair a conscience with a profit are exploding as more institutions and individuals demand products that meet environmental, social and government accountability standards. BlackRock Inc. and Nuveen Asset Management are among managers that have started more than 15 such products in the last 12 months, all of them focused on equities.
“People are more aware of climate change across the globe and are taking that to heart,” Lopez said by phone last week. “That drives the demand for investments that follow.” These investments can come in many flavors, encompassing ETFs focused on clean water or renewable energy, funds that offer a broad ‘‘ESG-optimized’’ portfolio of stocks, and one whose managers look for companies whose values align with their interpretation of the Bible.
Other Van Eck products tied to alternative energy or solar-related companies remain small, together bringing in less than $100 million. However, State Street Corp.’s Gender Diversity ETF was the second-most popular ETF startup of 2016, luring more than $240 million to invest in companies that have strong presence of women in their top ranks.
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