BlackRock Investment Management has established a new ESG-focused Australian Bond Index fund, with the company calling it the first of its kind to hit the country to meet demand for sustainable outcomes.
The fund developed in a partnership with VicSuper aims to provide investors with diversified access to the local fixed income market with enhanced social outcomes.
It excludes tobacco, alcohol, gambling, military weapons, civilian firearms, nuclear power, adult entertainment, genetically modified organisms (GMOs) and fossil fuel reserves.
BlackRock said its new product is the first indexed ESG Australian bond fund in the market, as well as the first 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.
Mr Vardy said that the market has now reached an inflection point in sustainable investing and that investors can future-proof portfolios by considering conscious alternatives.
“ESG has come to the forefront and can be implemented broadly across most asset classes without foregoing risk-adjusted returns,” he said.
“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.”
The unlisted fund is benchmarked to a customised Bloomberg Barclays MSCI SRI (socially responsible investing) ESG-Weighted Australian Aggregate A$100M Index.
BlackRock said an analysis of its past five years’ return history shows that investors would have experienced a similar return and risk outcome from investing in its custom ESG Index compared to the standard parent index.
“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,” said Dominik Rohe, Managing Director and Head of BlackRock, Australasia
“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.”
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