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What’s Next for Green Bonds after Issuance Tripled in Q1?

Environmental, social, and governance popularity is growing in the debt markets, as green bonds tripled in the first quarter of 2021. Investors can consider the VanEck Vectors Green Bond ETF (GRNB) to join in.

 

“Issuance of green bonds almost tripled to $111 billion in the first quarter, compared to the same period a year ago, as investors seek alignment with climate-risk and environmental solutions, according to Calvert Research and Management,” a Money Management article noted.

 

ESG is not just proliferating in the retail investing space. Institutional money is getting in on the action.

 

“From public pension plans to banks to endowment funds, we are seeing ever-greater institutional interest and mandates for sustainable and green investment,” said Brian S. Ellis, fixed income portfolio manager at Calvert Research and Management. “The asset growth in green bonds is a factor in their attraction. With overall green issuance now approaching the size of high-yield offerings, green bonds are recently offering greater liquidity and diversification opportunities — a major concern for institutional investors.”

 

The popularity spike in green bonds bodes well for GRNB, which gives investors ease of access to this debt market via an ETF wrapper. Investors can easily add or withdraw positions in green bonds via the dynamic ability to trade an ETF.

 

Summarily, GRNB seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the S&P Green Bond U.S. Dollar Select Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.

 

GRNB Chart

An Environmentally Conscious Alternative

For the environmentally conscious investor, an alternate play is via environmental services. Sub-sectors such as waste disposal might not hold the spotlight, but it’s a business that investors should might be wise to keep an eye on via funds like the VanEck Vectors Environmental Services ETF (EVX).

 

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Environmental Services Index. The fund normally invests at least 80% of its total assets in common stocks and ADRs of companies involved in the environmental services industry.

 

The index is designed to measure the performance of widely held, highly capitalized companies engaged in business activities that may benefit from the global increase in demand for consumer waste disposal, removal and storage of industrial by-products, and the management of associated resources.

 

EVX YTD Performance

 

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