Fidelity International launches in London with a high-yield corporate bond ETF aligned with the Paris Agreement

The fund, with ISIN IE000C1SVLJ9, joins the group’s range of actively managed ETFs and aims to combine returns from high-yield corporate bonds with stringent sustainability criteria.

The product has a Total Expense Ratio (TER) of 0.40 per cent and the fund’s base currency is the US dollar. The class listed on the LSE is hedged in GBP, which means that investors holding sterling are partially protected against fluctuations in the USD/GBP exchange rate. The distribution policy provides for the reinvestment of income, with shareholders having the option to request payment of the proceeds on a periodic basis.

Objective and strategy

The fund has a dual objective: on the one hand, to generate income and capital growth through a portfolio focused on high-yield (sub-investment grade) corporate bonds issued globally; on the other hand, to limit the portfolio’s exposure to carbon emissions in order to align with the long-term objectives of the Paris Agreement on reducing global warming.

The fund is actively managed. It utilises quantitative, fundamental and sustainability research to select securities, with the aim of maximising the portfolio’s return relative to its benchmark, whilst maintaining a carbon emissions profile that is at least aligned with that of the index. Over 90% of the assets are subject to ESG assessment. The fund may use derivatives for efficient portfolio management and currency hedging.

The benchmark: Solactive Paris Aligned Global Corporate High Yield USD Index

The fund uses the Solactive Paris Aligned Global Corporate High Yield USD Index as a reference for its investment process and for aligning its decarbonisation objectives. The index tracks the performance of publicly issued global high-yield corporate bonds, with an ESG filter that excludes issuers involved in sectors with high external impacts — tobacco, fossil fuels, controversial weapons — as well as companies with proven breaches of international standards and a significant negative impact on sustainable development goals.

From a climate perspective, the benchmark is designed to meet the minimum technical requirements of the European Union’s Paris-Aligned Benchmarks (PAB). Gross greenhouse gas (GHG) emissions and emissions intensity must be reduced by at least 50 per cent compared with the underlying benchmark (the Solactive EUR USD High Yield Corporate Index) at launch, with a self-decarbonisation trajectory of at least 7 per cent per annum on a geometric progression basis. Half-yearly reviews take effect at the end of January and the end of July.

Market context

High-yield corporate bond issuance in the United States totalled $1,522.8 billion in the first half of 2026, up 28.1 per cent year-on-year, according to SIFMA data. The average yield on the S&P U.S. High Yield Corporate Bond Index stood at 5.86% as at 13 July 2026. Credit spreads remain at modest levels, and several analysts — including those at the Schwab Centre for Financial Research — maintain a cautious stance on the high-yield segment, favouring an ‘up-in-quality’ approach given the low risk premium.

Against this backdrop, the launch of a high-yield ETF with an ESG overlay and PAB filter meets the demand for instruments offering exposure to sub-investment-grade credit within a predefined sustainability framework. It should be noted that the Fidelity fund does not passively track the index, but uses it as a benchmark for its decarbonisation objective and as a basis for its active selection process.

The fund is structured as a UCITS, domiciled in Ireland. Fidelity International operates in the UCITS ETF segment with a range that includes both passive and actively managed equity and bond products.