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UBS ETF (LU) Sustainable Development Bank Bonds UCITS ETF (USD) A-acc
Asset Class: Fixed Income
No significant harm to the sustainable investment objective
- It will make a minimum of sustainable investments with a social objective: 10%
- The financial product is passively managed and tracks an Index, securities are only eligible for the Index if they meet the rule set by the index methodology that the index-eligible issuer which must be a Multilateral Development Bank, having a credit quality rating of AA- (S&P) or Aa3 (Moody’s) and higher (if several ratings are available, the lowest rating is considered).
- Unlike commercial banks, MDBs do not seek to maximize profits for their shareholders. Instead, they prioritize development goals (aligned with the SDG 17), such as ending extreme poverty and reducing economic inequality. They often lend at low or no interest or provide grants to fund projects in infrastructure, energy, education, environmental sustainability, and other areas that promote development.
- There are no value-based criteria which can be excluded due to the given nature of the issuers.
- There is no controversies screening on the index issuers.
Environmental or social characteristics promoted by the financial product
The sub-fund integrates sustainability risks into its investment decision by promoting among other characteristics environmental or social characteristics or a combination of those characteristics and the companies included by the Index follow good governance practices. The sub-fund is accordingly classified as an Article 8 Product pursuant to the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial sector (SFDR)
- The following binding element(s) of the investment strategy are used to select the investments to attain the characteristic(s) promoted by this financial product: There are no value-based criteria which can be excluded due to the given nature of the issuers.The calculations do not take account of cash, derivatives and unrated investment instruments.
- The binding element(s) are calculated at quarter end using the average of all of business days’ values in the quarter.
- There is no policy to assess good governance practices due to the given nature of the issuers.
Proportion of investments
The minimum proportion of the investments of the financial product used to meet the sustainable investment objective is 100 %, with the exception of any investments used for hedging or relating to cash held as ancillary liquidity.
The methodology of the construction of the Index can be found in the annex to the prospectus or supplement.
Due diligence is carried out on index providers and/or data providers. This financial product is passively managed and seeks to track the performance and the ESG profile of the Index. Sustainability characteristics and risks are considered as part of the Index selection process.
- In terms of passive strategies tracking sustainability indexes as is the case with this financial product, the engagement process helps us to identify companies where material ESG and sustainability factors may present a future negative risk.
- While the UBS AM engagement program is across all asset classes and portfolios, the impact on passively managed fixed income strategies might be reduced, mainly due to the lack of voting rights and that companies which failed in UBS AM's engagement process are typically not excluded due to the passive management style.
- Nevertheless, passively managed fixed income assets are part of the engagement with senior management, as all other assets the firm manages, in order to achieve the biggest possible impact.
Data sources and processing
- The data sources used to attain the stated environmental or social characteristics are as follows:
- The MSCI ESG Score, supplied by the index provider
- Data is consumed from leading provider(s)
Limitations to methodologies and data
We apply a minimum coverage threshold for the data sources used to attain the stated environmental or social characteristics of the financial product, these thresholds ensure that the binding targets can be monitored and measured. Accuracy of data is dependent on 3rd party providers, coverage of data sources can be less than 100% due to uncovered asset types, incomplete or inconsistent data and gaps in the coverage of these 3rd party providers.
Designated reference benchmark
- The Reference Benchmark designated for the purpose of attaining the sustainable objective of the financial product is the Solactive Global Multilateral Development Bank Bond USD 25% Issuer Capped Index (Total Return).The alignment of the investment strategy with the methodology of the index is ensured on a continuous basis as the index provider rebalances the index on a regular basis and the Investment Manager tracks the Index in line with the limits set out in the investment policy of Fund.
- The financial product has initially selected the reference benchmark for its relevance to its investment strategy and the attainment of the characteristics it seeks to promote.
- The investment strategy of the fund is to track the benchmark’s return and its characteristics, including ESG characteristics, as closely as reasonably possible.
- The investment manager reviews the index methodology when the product is set up and the Index provider may be contacted if the Index methodology is no longer in line with the investment strategy of the financial product.
- The Solactive Global Multilateral Development Bank Bond USD 25% Issuer Capped Index offers investors exposure to Multilateral Development Banks (known as supranationals) which are backed by multiple sovereigns incl. all G7 countries. Bonds issued by the MDBs are mostly AAA-rated and the credit risk profile and returns are comparable to US Treasuries while the MDB providing guarantees and knowledge for developing countries to end global poverty and to promote sustainable economic growth (aligned to the SDG 17).
- The methodology of the construction of the Index can be found in the fund factsheet of the prospectus.
Attainment of the sustainable investment objective
- The financial product has initially selected the reference benchmark for its relevance to its investment strategy and the attainment of the sustainable objective it seeks to achieve. The Index rebalances on a monthly basis, more details on the index methodology applied by the Index provider can be found below. It is not anticipated that the composition of the Index will be adjusted to the extent that tracking is not possible.
- The Broad Market Index is the Solactive Global Multilateral Development Bank Bond Index. The Solactive Global Multilateral Development Bank Bond USD 25% Issuer Capped Index (Total Return) offers investors exposure to Multilateral Development Banks (known as supranationals) which are backed by multiple sovereigns incl. all G7 countries. Bonds issued by the MDBs are mostly AAA-rated and the credit risk profile and returns are comparable to US Treasuries while the MDB providing guarantees and knowledge for developing countries to end global poverty and to promote sustainable economic growth (aligned to the SDG 17).
- The methodology of the construction of the Index can be found in the fund factsheet of the prospectus.
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