Index firm MSCI and banking giant Barclays have teamed up to create a set of co-branded environmental, social and governance (ESG) fixed income indices – aiming to fill a gap in the market for ESG bond benchmarks.
The new indices will be aimed at institutional investors with ESG commitments, such as United Nations Principles for Responsible Investment (UN PRI) signatories, the duo said. They are targeted at investors with fixed income investments that require a benchmark which integrates ESG factors. They will be independently marketed by both firms.
They said that institutions will be able to use the new offerings to create index-linked investment products, such as exchange traded funds (ETFs), separately managed accounts and structured products.
MSCI and Barclays added that they would start meeting asset owners, asset managers and investment consultants in the coming weeks in a consultationprocess to ascertain which ESG strategies are most relevant and to define methodologies.
“This agreement brings our respective expertise in fixed income and ESG together to develop one product family,” said Waqas Samad, Head of Index, Portfolio and Risk Solutions at Barclays.
“We expect these new benchmarks to fill a gap in the market”
Baer Pettit, Head of MSCI’s Index Business, said: “Working together with Barclays, we expect these new benchmarks to fill a gap in the market and facilitate the growth of ESG investment.”
Fixed income has become increasingly important as investors seek to “de-risk” their portfolios. The terms of the deal between MSCI and Barclays were not disclosed.