New product to provide investors with access to the largest global issuers of green bonds
Horizons ETFs has announced the launch of the Horizons S&P Green Bond Index ETF, with shares no trading on the TSX under the ticker symbol HGGB.
HGGB is Canada’s first ETF-focused exclusively on providing exposure to a portfolio of global green bonds – a type of fixed-income instrument that raises capital for projects with specific environmental objectives or benefits.
Green bonds carry the same credit rating as their issuers’ other debt obligations. The green bond market is growing: according to the Climate Bonds Initiative, global green bond and loan issuances reached a new record of US$270 billion in 2020.
Since market inception in 2007, there have been more than US $1 trillion in cumulative green bond issuances, with European and American institutions among the largest issuers. HGGB seeks to replicate, to the extent possible, the performance of the S&P Green Bond U.S. Dollar Select Index, net of expenses. It also seeks to hedge the U.S. dollar value of its portfolio to the Canadian dollar at all times.
“More than ever before, governments, supranational institutions and corporations across the world are looking to fund important environmentally friendly initiatives that allow them to both improve their ecofootprint as well as ensure their operations will be in-line with the expanding rigors of environmental regulation,” said Steve Hawkins, CEO of Horizons ETFs.
“HGGB’s global mandate offers access to income from those eco-conscious organizations helping to lead the charge towards a greener future.”
As well allowing Canadian fixed income investors to deploy their capital to the largest global issuers of green bonds, they gain the added benefit of ensuring that the capital that investors lend indirectly by buying the ETF is used to fund important environmental initiatives around the world.
Hawkins added: “Organizations that fail to adapt to the impacts of climate change may face greater business challenges and could ultimately represent a greater risk within a portfolio because of it.
“Conversely, those that proactively prepare are more likely to be better situated to ‘weather the storm’, protecting their operations and helping to preserve the environment for years to come. These organizations offer arguably more ethical and potentially more sustainable sources of portfolio income for investors.
“HGGB gives Canadian investors the ability to potentially improve the climate risk metrics of their global fixed income exposure, while also feeling good about doing so, knowing they are directing their investment dollars toward a greener future.”