L&G ESG Emerging Markets Corporate Bond GBP Hedged UCITS ETF

Issuer: L&G ETFs

Asset Class: Fixed Income

TER: 38bps

Trading Currency: GBX

Pays Income: False

Listing Date: 15 Dec 2021

Ticker: EMDH

ISIN: IE000YPT5PG3

This investment offers a strategic approach to access the higher yield potential of corporate bonds from emerging market nations. It provides diversified exposure to a basket of US dollar-denominated debt securities issued by companies across various developing economies. By investing in corporate debt rather than sovereign bonds, investors can tap into the growth stories of specific companies within these dynamic regions, potentially offering a different risk-return profile compared to government-issued securities.

A key feature of this strategy is its integration of responsible investing principles. The underlying portfolio is constructed by applying specific environmental, social, and governance (ESG) screens, which systematically exclude issuers involved in controversial business activities such as thermal coal, tobacco, and certain weapons. Furthermore, it filters out companies that fail to adhere to the globally recognized standards of the UN Global Compact. This screening process allows investors to gain exposure to the emerging market corporate debt landscape while aligning their capital with sustainability objectives and mitigating certain ethical risks.

For international investors, this particular vehicle offers a currency-hedged share class. This feature is designed to neutralize the impact of exchange rate fluctuations between the US dollar (the currency of the underlying bonds) and the investor's reporting currency. By minimizing currency risk, the strategy allows investors to focus more directly on the credit quality and price performance of the underlying bond portfolio, making it a suitable option for those seeking purer exposure to the asset class without the added layer of foreign exchange volatility.