iShares Trust iShares ESG Aware USD Corporate Bond ETF (SUSC) seeks to track the Bloomberg MSCI USD Corporate ESG Weighted Bond Index, which measures the performance of U.S. dollar-denominated investment-grade corporate bonds while applying environmental, social, and governance (ESG) screening criteria to exclude companies with poor sustainability practices.
How It Works
SUSC uses a passively managed, market-value-weighted approach that mirrors its ESG-screened benchmark index. The fund holds investment-grade corporate bonds from issuers that meet specific ESG criteria, excluding companies involved in controversial weapons, tobacco, thermal coal, and those with severe ESG controversies. Portfolio duration typically ranges 6-8 years with quarterly rebalancing to maintain index alignment and ESG compliance standards.
Key Features
- Combines traditional corporate bond exposure with ESG screening, excluding approximately 20% of the broad corporate bond universe
- Maintains similar duration and credit quality profile to non-ESG corporate bond ETFs while applying sustainability filters
- Offers 3.62% dividend yield with monthly distributions typical of investment-grade corporate bond portfolios
Risks
- This ETF can lose value when interest rates rise, as bond prices move inversely to rates—a 1% rate increase could cause 6-8% price decline
- Credit risk exists if corporate issuers face financial distress or downgrades, potentially causing individual bond holdings to lose significant value
- ESG screening may limit diversification and cause performance deviation from broader corporate bond market during certain periods
Who Should Own This
Best suited as a core fixed-income holding (20-40% of total portfolio) for conservative to moderate investors with 3+ year time horizons seeking steady income with ESG considerations. Low to medium risk tolerance required for interest rate sensitivity. Ideal for retirement accounts or investors prioritizing sustainable investing principles.