Schroders launches CoCo and USD IG corporate bond ETFs

Schroders has launched two active fixed-income UCITS ETFs: the Schroder CoCo Financial Credit Active UCITS ETF and the Schroder USD Investment Grade Corporate Bond Active UCITS ETF, providing exposure to contingent convertible bank debt and US-dollar investment-grade corporate bonds.

The Schroder CoCo Financial Credit Active UCITS ETF will invest at least two-thirds of its assets in contingent convertible (CoCo) bonds denominated in US dollars, euros or sterling and issued by global financial institutions. Managed by Cindy Wang, the strategy follows a bottom-up approach and uses Schroders’ in-house credit research to identify opportunities across regions, financial sub-sectors and credit ratings. The fund aims to deliver income and capital growth in excess of the ICE BofAML Contingent Capital Index (hedged to USD) after fees over a three- to five-year period.

The Schroder USD Investment Grade Corporate Bond Active UCITS ETF will allocate at least two-thirds of its assets to US dollar-denominated fixed and floating rate securities issued by companies worldwide. The strategy is led by Julien Houdain with portfolio managers Martin Coucke and Francois Carrie. It combines quantitative analysis to estimate relative value across thousands of bonds with a risk model assessing individual bond characteristics, followed by a portfolio optimisation process to construct a diversified portfolio. The ETF seeks to outperform the Bloomberg US Corporate Total Return Index after fees over three to five years.

Schroders noted the launches follow its first fixed-income UCITS active ETF introduced in September 2025 and form part of an effort to expand active fixed-income capabilities within an ETF wrapper.

Tom Stephens, Head of ETFs at Schroders, commented: “One year on from the launch of our first fixed income active ETF, these additions mark the next stage of our strategic build-out across fixed income and reinforce our ambition to develop a broad active ETF platform across asset classes. Our focus is on bringing established investment capabilities into an ETF wrapper where they can meet clear client needs. The launch of our CoCo Financial Credit and USD Investment Grade Corporate Bond strategies strengthens our fixed income offering and gives clients greater choice in how they access Schroders’ active fixed income expertise.”

Contingent convertible bonds are issued by banks and other financial institutions and convert into equity or are written down when predefined triggers are met. They can offer higher yields but carry issuer and regulatory risk. Investment-grade corporate bonds are issued by companies with relatively higher credit quality and lower default risk than high-yield debt and can include both fixed- and floating-rate instruments.

Schroders added the two ETFs widen the options available to investors seeking active fixed-income exposure within an ETF structure and will use the firm’s research and portfolio construction processes across distinct segments of the global credit market.