EU recovery

US exchange-traded fund WisdomTree (NASDAQ:WETF) has launched a bond ETF to support economic recovery efforts in the EU after the COVID-19 pandemic.

The ETF will invest in bonds issued by the EU to finance initiatives aimed at reducing unemployment risks and economic and social recovery.

The EU is expected to issue 850bn euros in bonds, with a focus on recovery as part of the SURE and Next Generation EU initiatives (a 750bn euros EU recovery fund for 2021-2023).

SURE is a mechanism for granting soft loans to the countries most affected by the pandemic to support employment. The total amount of funding is 100 billion euros. The Facility will run until 31 December 2022, but can be extended for six months in case of dire economic situation.

The WisdomTree European Union Bond UCITS ETF (EUBO) tracks the iBoxx EUR European Union Select Index, which contains bonds issued by the EU to finance these programmes.

Together, NextGeneration EU and the long-term EU budget form the largest stimulus package ever funded by the EU, totalling 1.8 trillion euros, according to WisdomTree.

"EU bonds could add another highly rated and liquid instrument with the potential to increase the share of the European Central Bank's asset purchase programmes", said the research director at WisdomTree.

However, EUBO is currently listed on the Italian and Frankfurt stock exchanges.