Investment Product and Service Launches

ISS ESG expands Solactive index series; Vanguard reveals ESG U.S. corporate bond ETF; and more. 

ISS ESG Grows Solactive Index Series

ISS ESG, the responsible investment arm of Institutional Shareholder Services (ISS), has expanded its Solactive ISS ESG Screened Corporate Bond Index Series.

The series is a rules-based, market value-weighted investable index family engineered to mirror the performance of the U.S. dollar and Euro denominated corporate bond markets, with the inclusion of eligible issuers operating in accordance with market standards on ESG controversy screens. Indices are available for both the investment grade and high-yield corporate bond markets.

Potential constituents are drawn from the Solactive IG and HY Corporate benchmark families on each monthly selection date, and must pass issuer-focused screening powered by ISS ESG data. The screened series applies the most frequently requested ESG filters, including identification of verified failures to respect established norms such as the United Nations Global Compact, verified involvement in controversial weapons, and involvement at specified revenue thresholds in certain controversial activities such as fossil fuels, military contracting, tobacco and gambling, among others.

“We are delighted to announce the launch of the Solactive ISS ESG Screened Corporate Bond Index Series to augment our ISS ESG Index Solutions and complement our existing suite of ISS ESG Fixed Income Solutions,” says Marija Kramer, head of ISS ESG. “Our suite of ISS ESG Index Solutions offers investors a choice of thematic and benchmark indices from global index providers building on ISS’ unique and proprietary data to track their portfolio’s performance and create index-linked investment products.”

Vanguard Reveals ESG U.S. Corporate Bond ETF

Vanguard has filed a preliminary registration statement with the Securities and Exchange Commission (SEC) to launch the Vanguard ESG U.S. Corporate Bond ETF.

The low-cost, broadly diversified exchange-traded fund (ETF) will be Vanguard’s first environmental, social and governance (ESG) themed fixed income product for U.S. investors and complements Vanguard’s existing equity ESG ETFs and mutual funds. The fund is expected to launch in September, and Vanguard’s fixed income group will serve as the fund’s adviser.

“Vanguard’s new U.S. ESG bond fund illustrates our commitment to providing investors with quality investment products and the ability to construct a portfolio that reflects their values,” says Kaitlyn Caughlin, head of Vanguard’s portfolio review department.

The Vanguard ESG U.S. Corporate Bond ETF will have an estimated expense ratio of 0.12% and seek to track the Bloomberg Barclays MSCI US Corporate SRI Select Index, a rules-based index that captures a broad cross-section of the U.S. corporate bond market and screens out the bonds of companies whose activities do not meet specific ESG criteria.

The index methodology includes using the parent Bloomberg Barclays U.S. Corporate Index as a baseline, with Bloomberg and MSCI applying robust exclusion screens for the bonds of companies that the index provider determines are involved in, and/or derive threshold amounts of revenue from certain activities or business segments. The index also excludes the bonds of any company that, as determined by the index provider, does not meet certain standards defined by the index provider’s ESG controversies assessment, including the United Nations Global Compact Principles, as well as companies that fail to have at least one woman on their boards or do not report board diversity.

Unified Trust Expands Availability of Stable Value Fund

Unified Trust Company has made its MetLife Unified Trust Stable Value Fund available in the defined contribution investment only (DCIO) space.

The fund seeks to provide low volatility and intermediate bond-like returns.

“We have observed significant market volatility year-to-date, and retirement investors are increasingly seeking opportunities to minimize volatility’s impact while still achieving strong returns,” says Christina Crawford, chief operating officer of Unified Trust Company. “Stable value funds are playing an increasingly valuable role in defined contribution plans, and we are pleased to expand our fund’s reach to a larger group of investors.”

In serving as a fiduciary on the stable value fund, Unified Trust provides oversight for investors, including monitoring fund performance compared to peers and the blended benchmark. The firm also monitors insurance company credit/finances and reviews the fund’s subadvisers.

More information on the MetLife Unified Trust Stable Value Fund is available here.