Industry Updates

Amundi starts Lyxor ETF merge in bid to hit ESG targets

The first merger of ETFs since acquired its French rival in January

Theo Andrew

Amundi AM logo and website

Amundi has outlined plans to merge two Lyxor ETFs with its Paris-aligned equivalents, the first such move since the asset manager completed the acquisition of its French rival in January.

In a shareholder notice, Amundi said the €21m Lyxor MSCI EMU ESG Leaders Extra UCITS ETF (EESG) and the €250m Lyxor MSCI Japan ESG Leaders Extra UCITS ETF (JPXC) would merge with the Amundi Index MSCI EMU SRI PAB UCITS ETF (SRHE) and the Amundi Index MSCI Japan SRI PAB UCITS ETF (JARI), respectively.

It comes after the French giant announced last December it was looking to make 40% of its ETF range to be made up of ESG ETFs by 2025.

A spokesperson for Amundi said: “Our clients are looking for a partner that is capable of accompanying them in their ESG and climate transition with the right products and solutions.

“In line with our strategic ambition to reach 40% of ESG ETF within our range by 2025, our product roadmap main focus is to keep on developing our ESG range by either launching new products or repositioning existing ones.”

Following the merge, which will take place on 18 November, SRHE will have roughly €223m assets under management (AUM) while JARI will house €823m.

Tracking Paris-aligned Benchmark (PAB) indices, the ETFs will follow a trajectory of a 7% reduction in carbon emissions on an annual basis and integrate an immediate reduction of 50% of the carbon intensity compared to the investable universe.

Investors in the Lyxor ETFs will go from paying a total expense ratio (TER) of 0.20% to 0.18% and will see their Sustainable Finance Disclosure Regulation (SFDR) label upgraded from Article 8 to Article 9.

Despite this, the expected tracking error will rise from 0.50% to potentially 1% in the ETFs from Amundi.

The Lyxor ETFs will rebalance prior to the merger, meaning EESG and JPXC “may not be able to comply with its investment limits and investment objective” for a short period.

Amundi’s €825m acquisition of Lyxor mean it had a product range of over 300 ETFs in Europe and a 14% market share, second only to BlackRock.

Speaking to ETF Stream following the acquisition, Fannie Wurtz, head of distribution and wealth division for Amundi’s passive and alternative business, said helping clients with their rotation into ESG would be one of their main focuses.

In March, the firm overhauled its ESG range, shifting over €13bn of assets to track PAB and Climate Transition Benchmark (CTB) indices.

Amundi’s ESG credentials were called into question following its purchase of Lyxor after climate campaigners Reclaim Finance suggested the move would dramatically increase its coal holdings, noting assets not covered by its exclusionary coal policy will rise by 84% following the purchase.

In June, the Amundi Euro Corporate Financials ESG UCITS ETF was absorbed by the Amundi Index Euro Corporate SRI UCITS ETF (ECRP). 

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