This is a passive bond ETF that tracks an index of US dollar-denominated, investment-grade green bonds issued to raise funds for environmental projects such as renewable energy and eco-friendly infrastructure. It adds an environmental lens to bond income.

It suits investors who want steady bond income while investing in green bonds whose proceeds go to environmentally friendly projects.

It is an ETF managed by iShares using a passive (index-tracking) approach.

It tracks an index of US dollar-denominated, investment-grade green bonds issued to raise funds for environmental projects such as renewable energy and eco-friendly infrastructure. It diversifies across green bonds issued by governments, agencies and corporations to pursue bond income, while reflecting the thematic angle that proceeds are restricted to environmental projects.

• Exposure to green bonds with environmental purposes
• Bond income combined with an environmental theme

Assets under management (AUM) stand at $493.9M, and the total expense ratio is 0.20% per year.

Compared with broad bond ETFs such as IUSB and BINC, the main points of comparison are the green bond theme and the asset composition.

Like ordinary investment-grade bonds, green bonds are driven by the direction of interest rates and credit spreads. Bond prices are generally pressured when rates rise and tend to strengthen when rates fall. Only the use of proceeds differs; the risk and return characteristics are similar to those of conventional bonds.

Fund flows into green bonds vary with the interest rate cycle, the credit environment and demand for environmental investing, and money sometimes shifts toward related products when interest in eco-friendly themes rises. It is also worth noting that performance varies with the rate and credit environment.

Its strengths are the environmental theme and investment-grade bond income, while interest rate sensitivity, credit risk and the limits of the issuance market are considerations.

For broad investment-grade bond exposure without an environmental theme, direct substitutes include AGG and BND, and for a focus on investment-grade corporate bonds, products such as USIG are also worth comparing. The three funds shown in the table, IUSB, BINC and JCPB, differ in that they are run as broad bond and active multi-sector or core-plus strategies without a green bond theme. This ETF's differentiator is its bond exposure narrowed to green bonds with environmental purposes.

Here are the points to review before investing in BGRN. The environmental theme and bond income are attractive, but interest rate sensitivity, credit risk and the limits of the issuance market should be checked in advance. It is also a good idea to compare it with broad bond products.

Rising interest rates and wider credit spreads are the main variables for short-term performance, and because the green bond market is smaller than the conventional bond market, composition may be limited. Even investment-grade bonds can incur losses when rates surge.

It is a suitable candidate for investors who want to add an environmental lens to bond income. If you want broad bond exposure without an environmental theme, consider products such as AGG and BND; if you want the green bond theme, it is advisable to compare this fund alongside them before choosing.