Applying the MSCI’s SRI index methodology, the fund excludes tobacco, alcohol, gambling, military weapons, civilian firearms, nuclear power, adult entertainment, genetically modified organisms (GMOs) and fossil fuel reserves. Issuer weights are then tilted based on the current MSCI ESG Rating, as well as its MSCI ESG Rating momentum. This is the first indexed ESG Australian bond fund in the market.  It is also the first indexed ESG fund with a dedicated Australian ESG benchmark.

The fund is managed by Craig Vardy, Head of Fixed Income at BlackRock Australia, and the wider Australian fixed income team. Craig Vardy said: “We have reached an inflection point in sustainable investing. ESG has come to the forefront and can be implemented broadly across most asset classes without foregoing risk-adjusted returns.

“The ESG-focused Australian Bond Index fund is a passive investment strategy designed for ESG-aware investors seeking a core fixed income exposure to Australian-dollar securities. From a fee perspective, investors can now invest sustainably at the same low fee as non-ESG fixed income passive solutions. We believe investors can future-proof portfolios by considering sustainable investment alternatives.

The fund was developed in partnership with and has been seeded by VicSuper, a A$21 billion superannuation fund, reiterating Australian investors’ growing demand for improved ESG outcomes.

An analysis of the past five years return history shows that investors would have experienced a very similar return and risk outcome from investing in our custom ESG Index compared to the standard parent index.

Dominik Rohe, Managing Director and Head of BlackRock, Australasia, said: “Our goal is to be at the forefront of sustainable investing solutions for Australasian investors. As a fiduciary to our clients, we dedicate ourselves to protecting and growing the value of our clients’ assets, and we believe business-relevant sustainability factors can contribute to a company’s long-term financial performance.

“Sustainable investing is going mainstream with the support of improved data and technology, including new portfolio analytics, transparent ESG data, and model portfolios. The launch of our ESGABI fund reflects the growing demand from our clients for sustainable investing solutions.”

The post BlackRock launches Australia’s first ESG-focused Australian Bond Index Fund appeared first on AdviserVoice.