Introducing our ESG corporate bond ETFs

You can gain exposure to corporate bonds from issuers meeting strict ESG criteria

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Incorporating ESG into your corporate bond portfolio

Corporate bond markets are much more diverse than those for government bonds, with exposure to companies operating in a variety of sectors. In addition to the number of years to maturity and the currency in which the bonds are issued, corporate bond investors also have a choice in terms of the issuing companies’ credit quality and even how the businesses are managed.

Our core range of corporate bond ETFs include those aiming to avoid certain sectors and to emphasise companies with strong environmental, social and governance (ESG) characteristics. They provide investors with low-cost core elements for constructing diversified ESG portfolios. 

Investment Grade (IG) Corporate Bond ESG ETFs

We offer four investment-grade ETFs, three focused on single currency exposures denominated in USD, EUR or GBP and one which provides global bond exposure. Our range of single-currency Corporate Bond ESG ETFs track the Bloomberg MSCI Liquid Corporate ESG Weighted SRI indices which are designed to provide broad and diversified exposure to investment grade corporate bonds denominated in the respective currencies.

Our Global Corporate Bond ESG ETF tracks the performance of the multi-currency Bloomberg MSCI Global Liquid Corporate ESG Weighted SRI Sustainable Bond index, which aims to provide broad and diversified exposure to investment grade corporate bonds issued in USD, EUR, GBP, and CAD, whilst applying more stringent ESG criteria than the single currency indices. 

All indices, however, integrate ESG by not only applying negative screening but also by tilting constituent weights based on ESG ratings. Securities are excluded from the index if the issuing company:

  • Has an MSCI ESG rating below BB (or doesn’t not have a rating) for our single currency ETFs, and a rating below BBB for our Global Corporate Bond ESG UCITS ETF; 
  • Is involved in (as defined by the index provider) alcohol, adult entertainment, controversial weapons, conventional weapons, fossil fuels, gambling, genetically modified organisms (GMOs), civilian firearms, nuclear weapons, nuclear power, oil sands, thermal coal, tobacco, or unconventional oil and gas;
  • Is domiciled in an emerging market country;
  • has faced very severe controversies pertaining to ESG issues over the last three years. 

Each of the remaining securities has an ESG score that has been assigned using MSCI ESG metrics. This ESG Score is used to re-weight the eligible securities from their natural (market capitalisation) weights by applying a factor tilt in favour of constituents with higher ESG Scores. 

High Yield Corporate Bond ESG ETFs

We also offer two high-yield ETFs that follow indices with similar methodologies as their investment-grade counterparts. The exclusions are the same as those listed above, other than our global high-yield ETF, which includes issuers from developed and emerging markets. As with the investment-grade ETFs, both the global and the USD high-yield ETFs are also designed to re-weight eligible securities using their ESG Scores.

Investment risks

  • For complete information on risks, refer to the legal documents. The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested. The creditworthiness of the debt the Fund is exposed to may weaken and result in fluctuations in the value of the Fund. There is no guarantee the issuers of debt will repay the interest and capital on the redemption date. The risk is higher when the Fund is exposed to high yield debt securities. Changes in interest rates will result in fluctuations in the value of the fund. Debt instruments are exposed to credit risk which relates to the ability of the borrower to repay the interest and capital on the redemption date. The Fund intends to invest in securities of issuers that manage their ESG exposures better relative to their peers. This may affect the Fund’s exposure to certain issuers and cause the Fund to forego certain investment opportunities. The Fund may perform differently to other funds, including underperforming other funds that do not seek to invest in securities of issuers based on their ESG ratings.

    Applicable to Invesco Global High Yield Corporate Bond ESG and USD High Yield Corporate Bond ESG UCITS ETFs: This fund may hold a significant amount of debt instruments which are of lower credit quality. This may result in large fluctuations of the value of the ETF as well as impacting its liquidity under certain circumstances.

    Applicable to Invesco GBP corporate Bond ESG and Invesco USD IG Corporate Bond ESG ETFs only:  The Fund might be concentrated in a specific region or sector or be exposed to a limited number of positions, which might result in greater fluctuations in the value of the Fund than for a fund that is more diversified.

    Applicable to Invesco Global High Yield Corporate Bond UCITS ETF only: It may be difficult for the Fund to buy or sell certain instruments in stressed market conditions. Consequently, the price obtained when selling such instruments may be lower than under normal market conditions.

Why Invesco ETFs?

Each of the Invesco Corporate Bond ESG UCITS ETFs aims to track the performance of an index through passive, physical replication. Invesco’s team of portfolio managers aim to achieve the fund’s objective by using portfolio modelling tools and techniques to buy and hold a proportion of the index securities that represents the characteristics of the entire index. The objective of this sampling method is to replicate the index performance as closely as possible while reducing the costs that would normally be incurred with full replication.

Our portfolio management team is responsible for the efficient buying and selling of the ETF’s bonds, and the rebalancing of the portfolio, while our dedicated capital markets team works closely with leading brokers and market-makers who facilitate the efficient trading of our ETFs. 

The full list of ETF holdings and index constituents are published daily on the Invesco ETF website. 
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  • Data as at 31 January 2023, unless otherwise stated.

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    For more information on our funds and the relevant risks, please refer to the share class-specific Key Information Documents/Key Investor Information Documents (available in local language), the Annual or Interim Reports, the Prospectus, and constituent documents, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.ie. The management company may terminate marketing arrangements.

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    Any calculations and charts set out herein are indicative only, make certain assumptions and no guarantee is given that future performance or results will reflect the information herein.

    For details on fees and other charges, please consult the prospectus, the Key Information Documents/Key Investor Information Documents and the supplement of each product.

    UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.

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    No action has been taken or will be taken in Israel that would permit a public offering of the Fund or distribution of this document to the public in Israel. This Fund has not been approved by the Israel Securities Authority (the ISA). Accordingly, the Fund shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1968,which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Fund is being purchased for its own account and not for the purpose of re-sale or distribution. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent. Nothing in this document should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licensed investment advisor prior to making any investment. Neither Invesco Ltd. Nor its subsidiaries are licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee there under. This document does not constitute an offer to sell or solicitation of an offer to buy any securities or fund units other than the fund offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.

    The offering of ETFs has not been and will not be notified to the Belgian Financial Services and Markets Authority (Autoriteit voor Financiële Diensten en Markten/Autorité des Services et Marchés Financiers) nor has this document been, nor will it be, approved by the Financial Services and Markets Authority. The ETFs may be offered in Belgium only to a maximum of 149 investors or to investors investing a minimum of €250,000 or to professional or institutional investors, in reliance on Article 5 of the Law of August 3, 2012. This document may be distributed in Belgium only to such investors for their personal use and exclusively for the purposes of this offering of ETFs. Accordingly, this document may not be used for any other purpose nor passed on to any other investor in Belgium.

    The representative and paying agent for the sub-funds of Invesco Markets plc, Invesco Markets II plc and Invesco Markets III plc in Switzerland is BNP PARIBAS, Paris, Zurich Branch, Selnaustrasse 16 8002 Zürich. The Prospectus, the Key Information Document, the Articles of Incorporation of the Company and the annual and semi-annual reports are available free of charge from the Representative in Switzerland. The ETFs are domiciled in Ireland.