Trackinsight: Exploring the Green Bonds ETFs scenery in 2022

Climate saving investors add $140 million into Green Bonds ETFs so far in 2022.

Green bonds have witnessed some decent inflows this year, garnering over $140 million (net) from investors. These ESG investment products are fixed-income instruments used to fund projects that have a positive impact on the environment or climate benefits. This includes renewable energy, sustainable resource use, conservation, clean transportation and adaptation to climate change. By adding green bonds to a portfolio, an investor is funding projects that have a strong impact on net-zero ambition.

Most popular Green Bonds ETFs in America in 2022

Among the most popular green bonds funds, this year is the recently launched (January 2022) Wealthsimple North American Green Bond Index ETF (WSGB), which received $156 million since inception. The fund seeks to replicate the performance of the Solactive Green Bond USD CAD DM CAD hedged Index and invests primarily in investment-grade green, social, and sustainable bonds, with its foreign currency exposure, hedged back to the Canadian dollar. WSGB has a total expense ratio of 0.25% and trades on the NEO Exchange.

Other green bonds ETFs available in America include iShares USD Green Bond ETF (BGRN),  Horizons S&P Green Bond Index ETF (HGGB), and VanEck Vectors Green Bond ETF (GRNB).

Most popular Green Bonds ETFs in Europe in 2022

Europe has a large offering of green bond ETFs, and is home to popular products such as the Lyxor Green Bond (DR) UCITS ETF - Acc – EUR (CLIM, €375.13 million AUM), Lyxor Green Bond (DR) UCITS ETF - Monthly Hedged to EUR - Acc – EUR (KMLH, €168 million AUM), and Xtrackers EUR Corporate Green Bond UCITS ETF 1C - EUR (XGBE, €154 million AUM).

Among the trio, XGBE has been the most popular this year, receiving $22 million from investors. The fund seeks to track Bloomberg MSCI EUR Corporate and Agency Green Bond Index and invests in EUR-denominated corporate (85%) and agency (15%) investment grade green bonds. In terms of country exposure (as of January 31st, 2022), France has the highest allocation (30%), followed by the Netherlands (22%), Spain (9.17%), Germany (8%) and Italy (6%). The investments are spread across green bonds with different maturities, including 5-7 years (22%), 3-5 years (21%), 7-10 years (18%) and 1-3 years (12%).

XGBE has a total expense ratio of 0.25% and trades on the Deutsche Boerse Xetra (XGBE GY, EUR), the Borsa Italiana (XGBE IM, EUR) and the SIX Swiss Exchange (XGBE SW, CHF).

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