Investment Product and Service Launches

ISS ESG launches labels and standards solutions; Principal advances plan for first semi-transparent ETF offering; and Xtrackers by DWS launches ETF with exposure to high-yield corporate bonds.

ISS ESG Launches Labels & Standards Solutions

As voluntary environmental, social and governance labels and standards continue to grow in relevance and popularity globally, ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc., has launched “one-stop fully integrated ISS ESG Labels & Standards Solutions.” These solutions leverage robust data from ISS ESG’s wide range of highly specialized proprietary solutions to support asset managers and asset owners in addressing ESG needs.

Alignment with labels and standards can be challenging due to the diversity of approaches taken by different governance and administrative bodies. These standards come in many forms, including the integration of global principles, reporting and disclosure frameworks, as well as product-specific labels or awards.

Due for release in early February, the ISS ESG Labels & Standards Solutions are designed to cover key jurisdictions and international frameworks and will be rolled out on a region-specific basis. Requirements of the different labels and standards vary significantly, from qualitative and quantitative reporting and disclosure, adhering to minimum standards, to integrating ESG considerations into the investment process.

The solutions include ISS ESG’s global coverage of up to 8,000 issuers for equity and fixed-income assets, enhanced climate and controversies data related to an assessment universe of up to 28,500 issuers’ greenhouse gas data, plus 25,000 issuers covered within norms-based research.

“Keeping track of the varying requirements of ESG labels and standards globally is an ongoing challenge for investors,” says Maximilian Horster, head of ISS ESG. “The one-stop fully-integrated ISS ESG Labels & Standards Solutions tailored to different geographic markets provides consolidated functionality for up-to-date review, verification, disclosure and reporting.”

*Editor’s note: ISS is the owner of ISS Media, which operates PLANADVISER and PLANSPONSOR Magazines.

Xtrackers by DWS Launches ETF With Exposure to High-Yield Corporate Bonds

Xtrackers by DWS has launched an exchange-traded fund aimed at providing dynamic risk-controlled exposure to U.S. dollar high-yield corporate bonds.

The Xtrackers Risk Managed USD High Yield Strategy ETF tracks the Adaptive Wealth Strategies Risk Managed High Yield Index, which uses a daily algorithm to dynamically adjust exposure between bonds and cash equivalent investments. It is designed to track the performance of the U.S. dollar-denominated high-yield corporate bond market during normal market conditions, and the performance of a U.S. dollar cash position during periods of adverse market conditions.

The underlying index uses a rules-based allocation mechanism to allocate between either 100% exposure to the Solactive USD High Yield Corporates Total Market Index or 100% exposure to the Solactive Fed Funds Effective Rate Total Return Index, based on quantitative market risk signals derived from measurements of price changes in the market.

The ETF has a gross/net expense ratio of 0.45%/0.30% and is designed to use investments in other Xtrackers ETFs to gain exposure to high-yield bonds, in particular Xtrackers USD High Yield Corporate Bond ETF.

Principal Advances Plan for First Semi-Transparent ETF Offering

Principal Global Investors has announced its plan to add its first semi-transparent exchange-traded fund to its growing lineup of ETFs, filing for an exemptive order to use Fidelity’s active equity ETF methodology. This approach complements Principal’s active management capabilities.

When approved and launched, the first semi-transparent ETF offered by Principal will target real estate assets.

“We believe in active investing and are excited to expand our offerings of new investment strategies and solutions that could deliver strong performance and generate more income for investors,” says Jill Brown, Principal Global Investors U.S. wealth markets managing director. “There’s tremendous growth potential in semi-transparent ETFs and, with our active management DNA, we believe we’re uniquely positioned to deliver in this space.”

Principal currently offers 14 ETFs—six strategic beta and eight actively managed—that are designed to enhance investor returns, mitigate risk and improve portfolio diversification.

Fidelity’s active equity ETF model employs a “tracking basket” methodology, which maintains the benefits of the ETF structure, provides information to market participants to promote the efficient trading of shares, and preserves the ability to add value through active management.

“We are excited to work with Principal as it seeks to expand its ETF offering and develop innovative new solutions to help meet the needs of investors,” says Greg Friedman, head of ETF management and strategy at Fidelity. “We believe Fidelity’s methodology is an industry-leading approach, designed to operate seamlessly within the existing ETF market.”