JPMorgan to Exclude Russia From Two ESG Sovereign Bond Indexes
(Bloomberg) -- JPMorgan Chase & Co. is planning on excluding Russian debt from two ESG versions of its sovereign bond indexes.
The U.S. lender will cut Russian debt from the JPMorgan ESG Emerging Market Bond Index and the JPMorgan ESG GBI-EM Global Diversified Index, according to a person familiar with the matter. The bank is expected to announce the decision later today, said the person, who asked not to be identified because the matter is private.Â
This decision is likely to have broad consequences among asset managers. Many exchanged-traded funds and passive tracker funds follow indexes and can't make any changes to their holdings unless this is done by the index provider.Â
This has made it tricky for some asset managers to dump Russian firms that have been sanctioned. Before making changes they also need to let investors know their strategies could deviate from the original objectives.
BlackRock Inc. and Vanguard Group are among the biggest managers of ETFs and are grappling to find a way to unload stakes in firms sanctioned for Russia's invasion of Ukraine.Â
BlackRock's $16-billion iShares JPMorgan USD Emerging Markets Bond ETF holds debt issued by VEB, which the The U.S. Treasury Department sanctioned on Thursday, giving fund managers 90 days to wind down their holdings. The fund tracks a JPMorgan index and had a 3.8% weighting of Russian securities at year-end.
Read more: BlackRock, Vanguard Grapple With Sanctions on Russian Securities
©2022 Bloomberg L.P.
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