The FEIG ETF is designed to track the price and yield performance of the Northern Trust ESG & Climate Investment Grade US Corporate Core Index. It focuses on US dollar-denominated investment-grade corporate bonds that reflect environmental, social, and governance characteristics and climate criteria.

It suits investors who want to include US investment-grade corporate bond income and diversified exposure in a long-term asset allocation while taking environmental, social, and governance criteria into account.

It is a passive (index-tracking) ETF managed by FlexShares.

To reflect the composition and characteristics of its underlying index, the fund uses a sampling approach, giving exposure to the category of US dollar-denominated investment-grade corporate bonds that meet environmental, social, and governance and climate criteria. Rather than picking individual bonds directly, it builds its portfolio according to index rules.

• Tracks a corporate bond index that reflects environmental, social, and governance and climate criteria
• Passive sampling strategy centered on investment-grade corporate bonds

Assets under management (AUM) stand at $48.6M, and the total expense ratio is 0.12% per year.

Because the FEIG ETF tracks its underlying index through sampling, its performance may differ from the index depending on fees, portfolio composition, and liquidity conditions.

Corporate bond prices are sensitive to market interest rates and perceptions of credit risk, so the return trend of the FEIG ETF is affected by them as well. When expectations for falling rates grow, existing bond prices may benefit, but deteriorating credit conditions or wider rate volatility can increase price swings.

Demand for corporate bonds that take environmental, social, and governance criteria into account can be influenced by capital flows from investors who want selection criteria different from traditional investment-grade corporate bond exposure. However, fund flows and trading conditions can change with market conditions and liquidity, so it is worth checking trading volume and bid-ask spreads before buying.

Its strength is exposure to investment-grade corporate bonds built on environmental, social, and governance criteria, but investors should also review interest rate risk, credit risk, tracking error, and liquidity risk.

In the table, the LQD ETF is a benchmark for broad investment-grade corporate bond exposure, and the USIG ETF offers similar investment-grade corporate bond exposure, so it can be used to compare differences in fees and management approach. The USHY ETF and HYG ETF center on high-yield corporate bonds and therefore have a different credit risk profile. The SPHY ETF also falls in the high-yield corporate bond category, so rather than treating it as directly equivalent to the FEIG ETF, investors should compare credit quality and distribution characteristics together. Information on comparable listed funds is limited.

The FEIG ETF's selection criteria reflect environmental, social, and governance and climate factors, but those criteria do not guarantee better performance in every market environment. Before investing, check corporate bond risk, trading conditions, and the irregularity of distributions together.

The corporate bond market can be sensitive to rising interest rates, deteriorating credit conditions, and shrinking liquidity. In addition, holding rules that apply environmental, social, and governance criteria can produce results different from the general corporate bond market, and sampling may widen the gap with the underlying index.

The FEIG ETF is one option for investors who want investment-grade corporate bond exposure that takes environmental, social, and governance and climate criteria into account. However, because distributions are irregular and there are interest rate, credit, and liquidity risks as well as potential tracking error, investors should review it together with their overall bond allocation and trading conditions.