VanEck, begun trading the first US listed Green Bond ETF, the VanEck Vectors Green Bond ETF (NyseArca: GRNB), on Monday, March 6, 2017. Here is a synopsis of the new ETF:
|Symbol: GRNB||Exchange: NYSE ARCA|
|Name: VanEck Vectors Green Bond ETF||Net Expense Ratio: 0.40%|
The VanEck Vectors Green Bond ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the S&P Green Bond Select Index.
The S&P Green Bond Select Index is comprised of bonds issued for qualified “green” purposes and seeks to measure the performance of green-labeled bonds issued globally. The Index is sponsored by S&P Dow Jones Indices LLC (Index Provider), which is not affiliated with or sponsored by the Fund or the Adviser.
“Green” bonds are bonds whose proceeds are used principally for climate change mitigation, climate adaptation or other environmentally beneficial projects, such as, but not limited to, the development of clean, sustainable or renewable energy sources, commercial and industrial energy efficiency, or conservation of natural resources. For a bond to be eligible for inclusion in the Index, the issuer of the bond must indicate the bond’s “green” label and the rationale behind it, such as the intended use of proceeds. As an additional filter, the bond must be flagged as “green” by Climate Bonds Initiative (CBI), an international not-for-profit working to mobilize the bond market for climate change solutions, to be eligible for inclusion in the Index. The Index is market value-weighted and includes supranational, corporate, government-related, sovereign and securitized “green” bonds, and may include both investment grade (i.e., BBB-/Baa3 or higher) and below investment grade rated securities (i.e., BB+/Ba1 or lower; commonly referred to as high yield securities or “junk bonds”). The maximum weight of below investment grade bonds in the Index is capped at 20%. “Securitized green bonds” are securities typically collateralized by a specified pool of assets, such as automobile loans or other consumer receivables. Qualifying securities must have a maturity of at least 24 months at the time of issuance to be included, and have at least one month remaining until maturity at each rebalancing date.
As of February 17, 2017, the Index consisted of 189 bonds issued by 99 issuers and the weighted average maturity of the Index was approximately 7.3 years. No more than 10% of the Index can be focused in a single issuer. As of the same date, approximately 54% of the Index was comprised of Regulation S securities and 18% of the Index was comprised of Rule 144A securities. The Fund may also invest in other unregistered securities in the future.
Fund Top Holdings (03/09/17):
|French Republic Government Bond Oat, 1.75%, 06/25/2039||7.46%|
|Kreditanstalt Fuer Wiederaufbau, 0.375%, 07/22/2019||4.84%|
|European Investment Bank, 0.5%, 11/15/2023||4.39%|
|Electricite De France Sa, 1.0%, 10/13/2026||4.12%|
|Ing Bank Nv, 2.0%, 11/26/2018||4.07%|
|Bank Of China Ltd/Luxembourg, 2.25%, 07/12/2021||3.94%|
|Mtr Corp Ci Ltd, 2.5%, 11/02/2026||3.86%|
|European Investment Bank, 1.375%, 11/15/2019||3.39%|
|Kreditanstalt Fuer Wiederaufbau, 0.5%, 01/27/2021||3.19%|
|Tennet Holding Bv, 0.875%, 06/04/2021||2.67%|
Fund Country Weightings (03/09/17):
GRNB Home Page
Here is a comment from Ed Lopez, Head of ETF Product Management and Marketing with VanEck:
“Until now investors have had limited options for efficiently accessing ‘green’ fixed income exposure. We believe there’s demand for green bonds from ESG-focused investors, but there may be appeal to traditional fixed income investors as well. Green bonds are simply conventional bonds with an environmentally friendly use of proceeds. So, global bond investors can make an allocation to green bonds without significantly altering the risk and return profile of their portfolio.”