Rieger Report®: Global Green Bond ETF Rankings – VanEck’s GRBN #1

May 1st, 2020: Global Green Bond ETF Rankings

There are two global green bond exchange traded funds (ETFs) that I track, the iShares Global Green Bond (BGRN) and the VanEck Vectors Green Bond (GRNB). Both have similar objectives of investing in the green bond marketplace.    

The Rieger Report® ranks them as follows:

#1. VanEck Vectors Green Bond ETF (GRNB): Rationale: The USD remains strong and this ETF only invests in USD denominated bond issues. GRNB has higher yields (both 30 Day SEC Yield and Yield to Maturity) and a shorter duration than the iShares ETF. GRNB includes below investment-grade bonds that qualify in the underlying index helping it to provide incremental yield for the portfolio while adding some credit risk.

#2. iShares Global Green Bond ETF (BRGN): Rationale: Due to the global nature of green bonds and the resulting local currency issuance, the currency risk mitigation taken by iShares is a value proposition as long as hedging is cost efficient. The continued strong USD is a negative for this ETF. This ETF only includes investment-grade bonds that qualify in the underlying index helping to hold its overall yield low. The lower yield and longer duration of the ETF makes it less attractive in this environment. (Admittedly we are in a lower for longer environment, but duration risk is still present in some shape or form).

May 2020 Green Bond ETF Rankings

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Sources: iShares by BlackRock, VanEck. Table is shown for illustrative purposes only. Past performance is not indicative of future results. Data as of 4/30/2020 unless otherwise noted. (1) Quality data for GRNB as of 3/31/2020. (2) SEC Yield for BGRN is as of 4/29/2020.

Data Resources Used in This Report

Analyst Disclosure

  • J.R. Rieger and or the Rieger Report LLC has not received compensation either directly or indirectly from the sponsor(s) of the ETF(s) included in this report.
  • At the time of this writing, JR Rieger’s fixed income related holdings include investment grade individual municipal bonds, insured municipal bonds, a municipal bond money market fund and a position in the VanEck Vectors High-Yield Municipal Index ETF (HYD)

 

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