Franklin Sustainable Euro Green Corporate Bond 1-5 Year UCITS ETF

Issuer: Franklin Templeton

Asset Class: Fixed Income

TER: 18bps

Trading Currency: EUR

Pays Income: False

Listing Date: 02 Nov 2023

Ticker: GCOR

ISIN: IE0006K7DEL9

This fund offers targeted exposure to the growing market of short-duration, investment-grade green bonds issued by corporations. The primary objective is to track the performance of bonds whose proceeds are specifically used to finance projects with positive environmental or climate benefits. By focusing on debt instruments with a maturity of 1-5 years, the strategy aims to mitigate interest rate sensitivity, which can be a significant risk in longer-term bond portfolios. It is designed for investors who want to align their fixed-income allocation with sustainability goals, providing a direct channel to support corporate initiatives in areas like renewable energy, energy efficiency, clean transportation, and sustainable water management.

The investment strategy is built upon a transparent, rules-based index that employs a rigorous selection process. The methodology begins with a universe of investment-grade, euro-denominated corporate bonds. It then specifically selects securities that have been designated as 'Green Bonds' according to MSCI ESG Research criteria, ensuring the 'use of proceeds' meets strict environmental standards. Furthermore, the index incorporates Socially Responsible Investing (SRI) screens, excluding issuers involved in controversial business activities such as controversial weapons, tobacco, and thermal coal. This dual-layered approach ensures that investors are exposed not only to projects with environmental merit but also to companies that maintain a baseline of responsible corporate behaviour.

This financial instrument may be suitable for investors seeking a core fixed-income holding that integrates a strong ESG mandate. It allows for the potential of earning regular income while contributing to the financing of the transition to a more sustainable, low-carbon economy. The fund's focus on the short-end of the yield curve makes it a relatively conservative option within corporate credit, potentially appealing to those looking to reduce portfolio volatility. By investing in a diversified basket of green bonds, it offers a practical and efficient way to gain exposure to this specialised segment of the bond market, combining the goals of financial return with measurable environmental impact.