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BNP Paribas AM launches two fixed income ESG ETFs

Euro aggregate and short duration government bonds

Theo Andrew

Lorraine Sereyjol-Garros

BNP Paribas Asset Management (BNPP AM) has launched two fixed income ESG ETFs tracking the euro aggregate and short duration government bonds.

The BNP Paribas Easy Euro Aggregate Bond SRI Fossil Free UCITS ETF (BJLF) and the BNP Paribas Easy JPM ESG EMU Government Bond IG 1-3Y UCITS ETF (BJLH) are listed on the Euronext Paris, Borsa Italiana and the Deutsche Boerse with total expense ratios (TERs) of 0.15%.

BJLF tracks the Bloomberg MSCI Euro Aggregate ex-Fossil Fuel SRI Select index which offers exposure to euro-denominated sovereign and corporate investment grade bonds.

As well as applying ESG criteria, the index will exclude issuers in sectors with a negative ESG impact and those that violate the United Nation’s Global Compact.

Meanwhile, BJLH tracks the JP Morgan ESG EMU Government Bond IG 1-3 Year index, investing 90% of its assets in eurozone governments while applying ESG metrics.

The French asset manager has a similar strategy, the BNP Paribas Easy JPM ESG EMU Government Bond IG 3-5Y UCITS ETF (GEMU), offering slightly longer maturity.

The two ETFs are classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR). The new ETFs take BNPP AM’s sustainable bond ETF range to 17.

In December last year, the firm downgraded 24 ETFs with €15bn assets under management (AUM) from Article 9 to Article 8.

Bonds have been thrust into the spotlight so far this year, with their AUM growing by almost 30% in 2022, according to ETFGI.

Lorraine Sereyjol-Garros (pictured), global head of development for ETFs and index funds at BNPP AM, said: “Following the launch of our first sustainable bond ETF in 2019, we are further expanding our range of products with these two new funds to meet investors' growing appetite for fixed income exposure using an ESG approach.

“These launches provide investors with additional asset allocation building blocks that have limited levels of tracking error estimated to be comparable to those of non-ESG benchmarks. Our range also includes Paris-Aligned Benchmark (PAB) climate bond ETFs.”

It comes as BNPP AM merged its quantitative portfolio management teams to create a systematic and quantitative investment (SQI) division.

In January, ETF Stream revealed the group is planning to domicile ETFs in Ireland to compete with other ETF issuers in Europe.

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