Looking ahead, what types of new Fixed Income ETFs does Syms expect to see coming through in the next 6-12 months?
“We’re seeing very rapid growth in ESG fixed income ETFs right now. We’re only approaching around $30 billion of assets under management in ESG fixed income versus around over $300 billion in fixed income ETFs. It’s only about 10% of the space but has grown rapidly in recent years.
“Another positive is that as products develop, I believe that investors will have more flexibility to choose the exact shade of green that they’re looking for. This can range from the lightest green indices of ESG screens, to SRI benchmarks which have further exclusions from a broader set so that you’re increasing your ESG score a little bit more and all the way through to sustainable indices which have both negative screens for the worst industries, but then also apply a best in class approach.
“ETFs will provide investors with the ability to choose exactly what they want. There’s always a trade-off between increasing ESG score and how closely it tracks a broad index but I think we’ll see a lot of interest in this area in future.
“Finally, we’ve seen a big increase in green bond issuance recently. As they become more liquid, index providers will be able to create indices based on those bonds. And then once you have the liquid indices, we’ll see more ETF development following those indices. Overall, I think ESG is a key space to coming to ETFs.”
About Paul Syms, CFA
Paul is Head of EMEA ETF Fixed Income Product Management at Invesco. He brings a wealth of experience gained through a career spanning over 20 years in leading asset management companies. Prior to joining Invesco, Paul worked at Hermes Investment Management where he was a portfolio manager for over £9bn UK and global inflation linked bonds. He started his career at Scottish Widows Investment Partnership where his main responsibility was managing the global rates portfolios. He holds a BSc (Hons) degree in Genetics from the University of Nottingham and has been a CFA charterholder since 2004.
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Data as at 30th April 2021, unless otherwise stated.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
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