BNP Paribas Asset Management Debuts ESG-Driven Fixed Income ETFs

BNP Paribas Asset Management (‘BNPP AM’) announced the launch of the first two funds in its new suite of innovative fixed income exchange-traded funds (‘ETFs’). BNP Paribas Easy Sustainable EUR Corporate Bond and BNP Paribas Easy Sustainable EUR Government Bond are sub-funds of the BNP Paribas Easy Luxembourg SICAV and began trading on 20 February on Borsa Italiana and Deutsche Börse Xetra.

A solid bespoke sustainability approach, accessible through ETFs

BNPP AM’s ESG active fixed income ETF range applies an index-like approach combined with its proprietary approach to sustainability. Investors will benefit from BNPP AM’s proprietary ESG methodology, exclusion policies and active engagement. By integrating its own solid sustainable approach while aiming to replicate the performance of the benchmark, BNPP AM will offer the flexibility to adapt to future regulatory changes.

Marie-Sophie Pastant, Head of Index & ETF Strategies – Portfolio Management at BNPP AM comments: “This new range combines our bespoke sustainable methodology with our indexing expertise.  It will enable us to react promptly to any controversies without needing to wait for the next index rebalancing, and to respond rapidly to the changing environment. This will allow us to comply more easily with the different sustainability label criteria.”

Starting with two new fixed income funds

BNP Paribas Easy Sustainable EUR Corporate Bond is an Article 9 fund according to SFDR regulation, with a 100% sustainable investment universe. The Benchmark Index is Bloomberg Euro Aggregate Corporate, an investment grade bond index with an average duration of 4.4 years.

BNP Paribas Easy Sustainable EUR Government Bond is an Article 8 fund according to SFDR regulation, with a targeted Sustainable Investment of at least 30%. The Benchmark Index is J.P. Morgan EMU Investment Grade Index, an investment grade bond index with an average duration of 7.1 years.

The universe of both sub-fund’s portfolios consists of the components of the Benchmark Index. Following the application of BNPP AM ESG integration approach, their weightings may deviate from those of the Benchmark Index and the sub-fund may not invest in some Benchmark Index components. The sub-fund aims to reach a comparable performance vs the Benchmark.

Both funds will benefit from a better alignment with MiFID 2 preferences, enhanced ESG reporting and an independent sustainability approach.

Providing clients with choice and flexibility

Lorraine Sereyjol-Garros, Global Head of Development for ETFs & Index Funds at BNPP AM comments: “Fixed income will be a big focus for investors looking to navigate a challenging market environment in 2024.  For those rethinking fixed income in their portfolios, active ESG fixed income management through an ETF structure provides investors with diversification, sound sustainable credentials and an affordable, convenient approach to portfolio construction.”

Related Article: BNP Paribas Asset Management Updates Global Sustainability Strategy for Enhanced ESG Integration

BNPP AM manages ETF and index fund assets totalling EUR 48.5 billion, including thematic and sustainable products. BNPP AM’s range of fixed income index funds includes 14 ETFs covering sovereign bonds, investment grade and high yield corporate credit, and green, social and sustainability-linked bonds.  90% of BNPP AM’s ETF range is classified as SFDR Article 8 or 9 (100% of fixed income ETFs) and more than 70% of the range has a European sustainability label (either ISR, TSI, FNG or the Austrian Eco-Label).

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