VanEck Green Bond ETF
Invest in dollar-denominated green bonds that are issued to finance environmentally friendly projects.
The VanEck Green Bond ETF (GRNB) holds U.S. dollar-denominated green bonds that finance environmentally-friendly projects in the U.S. and around the world. With broad exposure to supranational, government, and corporate issues, the fund is an excellent sustainable alternative for the core bond allocation of your portfolio.
Let's take a closer look at green bonds and why the VanEck Green Bond ETF is a good option for sustainable fixed income.
What Are Green Bonds?
Green bonds are similar to conventional bonds that you may already hold in your portfolio. But unlike these bonds, issuers use green bonds to finance specific climate-related and environmental projects rather than putting the proceeds into a bucket of savings. As a result, you know your money is going toward a "green" cause.
Some examples of green bonds include:
- A municipality might issue green bonds to finance the construction of solar panels atop public buildings.
- A real estate developer may issue green bonds to finance energy-efficient upgrades in older buildings.
Unlike other green bond funds, the VanEck Green Bond ETF relies on the Climate Bond Initiative to qualify its holdings. The Climate Bond Initiative is a non-governmental organization (NGO) that leverages input from hundreds of technical experts to ensure that green bond issuers are truly using the bonds' proceeds to finance impactful projects.
How GRNB Fits in a Portfolio
The VanEck Green Bond ETF has very similar characteristics to a core bond fund, meaning it could be a drop-in replacement to make your portfolio more sustainable. But, of course, discussing the investment with a financial advisor is a good idea to ensure that it fits your overall risk tolerance and income requirements.
Unlike some other bond funds, GRNB offers a monthly distribution that may appeal to retirees seeking a regular income. In addition, its 0.2% expense ratio is much cheaper than core bond allocation mutual funds and other exchange-traded funds. And it has a 4-star rating on Morningstar, suggesting it's well-managed.
The fund holds approximately 350 different bonds with a five-year duration, making it a diversified middle-of-the-road option for investors. Many of its bond holdings also consist of high-quality issuers like Ford Motor Co., Apple Inc., the European Investment Bank, Fannie Mae, and Citigroup, which means there's a low possibility for defaults.
The Bottom Line
The VanEck Green Bond ETF (GRNB) offers investors a sustainable alternative to a core bond allocation. Unlike other ESG options, green bonds directly finance environmentally-impactful projects, meaning that your capital is directly helping to solve the climate crisis. And monthly distributions provide an excellent source of retirement income.
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Mar 23, 2023
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Impact FocusRenewable Energy
- Invest in a sustainable alternative to a core bond portfolio allocation.
- Access bonds issued to finance projects that have a positive environmental impact.