Bridging the sustainability gap in fixed income

As sustainable bond funds continue to see significant growth, driven by the regulatory landscape and investor preferences, the FTSE Blossom Fixed Income Index Series can help investors meet this demand. Launched in September 2024, this innovative index series integrates environmental, social, and governance (ESG) factors into fixed income strategies, helping investors manage long-term risks more effectively.

Why choose the FTSE Blossom Fixed Income Index Series?

The FTSE Blossom Fixed Income Index Series derives its issuers from the FTSE Blossom Japan Sector Relative Index and the FTSE Blossom World Composite Sector Relative Index. These indices reflect the performance of companies with strong ESG practices, providing institutional investors, asset managers, and ETF providers with a way to align bond portfolios with ESG goals without sacrificing performance.

Key takeaways:

• Performance and risk: Maintain high correlation with parent benchmarks, offering comparable yields and slightly lower volatility, proving that ESG integration does not compromise performance
• Sector and quality shifts: Meaningful tilt towards issuers with better ESG credentials, reflecting a focus on long-term sustainability
• Asset class expansion: Expands the successful FTSE Blossom franchise from equity to fixed income, offering ESG-aligned exposure to Japanese and global corporate bond markets
• Strategic allocation: Diversified, sustainable investment opportunities across various sectors and regions

Points of differentiation:

• ESG integration: Incorporates ESG factors into the methodology, aligning bond portfolios with sustainability goals
• Proven equity methodology: Leverages the successful FTSE Blossom equity index approach, ensuring consistency and reliability in ESG integration across asset classes
• Global and sectoral coverage: Broad coverage including Japanese and global corporate bonds, with sectoral shifts towards issuers with better ESG credentials
• Transparency and rules-based approach: Transparent, rules-based methodology ensures clarity and consistency in the selection and weighting of index constituents