Key Takeaways
- • Fidelity International launched two active corporate bond ETFs on October 23, 2023, classified as Article 9 under the Sustainable Finance Disclosure Regulation, with listings on the London Stock Exchange and Xetra.
- • Both the EUR and USD variants carry an ongoing charges figure of 0.2% (0.25% for currency-hedged versions), tracking Solactive benchmarks with self-decarbonisation trajectories of at least 7% annually.
- • The new funds expand Fidelity's existing Article 9 ETF suite, building on the success of the Sustainable Global Corporate Bond Paris-Aligned Multifactor UCITS ETF, which has attracted significant client demand for ESG-aligned fixed income exposure.
- • Fidelity manages $744.8 billion in assets as of June 2023, positioning the firm to capitalize on the broader ETF market growth from $200 billion in 2003 to $9.5 trillion in 2022.
- • The regional expansion addresses growing institutional demand for Paris Agreement-aligned fixed income strategies with transparent carbon reduction mechanisms and biannual index reviews.
Summary
Fidelity International introduced two new active fixed income ETFs on October 23, 2023, designed to meet institutional investor demand for Paris Agreement-aligned corporate bond strategies. The Fidelity Sustainable EUR Corporate Bond – Paris Aligned Multifactor UCITS ETF and the Fidelity Sustainable USD Corporate Bond – Paris Aligned Multifactor UCITS ETF were simultaneously listed on the London Stock Exchange and Xetra, marking an expansion of Fidelity's sustainable fixed income product suite.
Both funds are classified as Article 9 under the Sustainable Finance Disclosure Regulation, the highest ESG classification for investment funds, signaling a commitment to sustainable investment objectives rather than merely reducing harm. The EUR fund tracks the Solactive Euro Corporate IG PAB Index, while the USD version follows the Solactive USD Corporate IG PAB Index. Each benchmark incorporates a self-decarbonisation trajectory of at least 7% annually, with formal reviews conducted biannually in January and July to ensure alignment with Paris Agreement climate targets.
The fee structure remains competitive at 0.2% ongoing charges figure (OCF) for both funds, increasing to 0.25% for currency-hedged versions. This pricing reflects Fidelity's broader strategy of offering institutional-quality ESG-aligned fixed income at attractive cost levels. The launch complements Fidelity's existing Article 9 offerings: the Fidelity Sustainable Global Corporate Bond Paris-Aligned Multifactor UCITS ETF and the Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF, which have demonstrated strong client adoption.
Stefan Kuhn, head of Europe ETF distribution, emphasized the strategic rationale behind the expansion, citing the sector's dramatic growth trajectory. The global ETF market expanded from $200 billion in 2003 to $9.5 trillion in 2022, reflecting structural shifts toward passive and semi-passive investment vehicles. Fidelity's regional variations respond to investor preferences for currency-specific and geography-specific exposure while maintaining Paris-aligned decarbonisation standards. With $744.8 billion in assets under management as of June 2023, Fidelity possesses significant scale to support growing institutional demand for ESG-integrated fixed income solutions.
Both funds are classified as Article 9 under the Sustainable Finance Disclosure Regulation, the highest ESG classification for investment funds, signaling a commitment to sustainable investment objectives rather than merely reducing harm. The EUR fund tracks the Solactive Euro Corporate IG PAB Index, while the USD version follows the Solactive USD Corporate IG PAB Index. Each benchmark incorporates a self-decarbonisation trajectory of at least 7% annually, with formal reviews conducted biannually in January and July to ensure alignment with Paris Agreement climate targets.
The fee structure remains competitive at 0.2% ongoing charges figure (OCF) for both funds, increasing to 0.25% for currency-hedged versions. This pricing reflects Fidelity's broader strategy of offering institutional-quality ESG-aligned fixed income at attractive cost levels. The launch complements Fidelity's existing Article 9 offerings: the Fidelity Sustainable Global Corporate Bond Paris-Aligned Multifactor UCITS ETF and the Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF, which have demonstrated strong client adoption.
Stefan Kuhn, head of Europe ETF distribution, emphasized the strategic rationale behind the expansion, citing the sector's dramatic growth trajectory. The global ETF market expanded from $200 billion in 2003 to $9.5 trillion in 2022, reflecting structural shifts toward passive and semi-passive investment vehicles. Fidelity's regional variations respond to investor preferences for currency-specific and geography-specific exposure while maintaining Paris-aligned decarbonisation standards. With $744.8 billion in assets under management as of June 2023, Fidelity possesses significant scale to support growing institutional demand for ESG-integrated fixed income solutions.
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