New Listing

BNP Paribas AM unveils first active ETFs

The ETFs aim to actively implement ESG criteria rather than generating alpha

Jamie Gordon

Lorraine Sereyjol-Garros

BNP Paribas Asset Management has entered the active ETF market with the launch of two euro government and corporate bond ESG strategies, ETF Stream can reveal.

The BNP Paribas Easy Sustainable EUR Government Bond UCITS ETF (BJLM) and the BNP Paribas Easy Sustainable EUR Corporate Bond UCITS ETF (BJLN) are listed on Deutsche Boerse and Borsa Italiana with total expense ratios (TERs) of 0.18% and 0.25%, respectively.

The two active ETFs apply an “index-like approach” combined with BNPP AM’s proprietary ESG methodology and exclusion policies.

BJLM will look to maintain a tracking error of less than 25 basis points (bps) versus its benchmark, the JP Morgan EMU Investment Grade index, which is comprised of euro-denominated sovereign debt issued by eurozone countries with an average duration of 7.1 years.

The product targets at least 30% sustainable investment and is categorised Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

BJLN aims to have a tracking error less than 50bps versus the Bloomberg Euro Aggregate Corporate index, which is comprised of euro denominated investment grade credit with an average duration of 4.4 years.

The product has a 100% sustainable investment universe and is categorised as Article 9 under SFDR.

When launched, both ETFs are expected to be compliant with Belgium’s Febelfin ESG label, whereas only BJLN is expected to comply with France’s ESG framework.

Lorraine Sereyjol-Garros (pictured), global head of development for ETFs and index funds at BNPP AM, told ETF Stream: “The ETFs are different from what is currently available in the market in that these are active ETFs but purely in an ESG sense.

“The goal is not to generate alpha. It is to capture an investment universe while actively incorporating BNP Paribas’s ESG methodology.

“We began our ESG ETF range in 2016 and we then partnered with a provider to create custom indices incorporating our ESG methodology, but it is quite complex and we wanted a methodology nimble enough to exclude issuers involved in controversies between rebalance dates.”

Marie-Sophie Pastant, head of index and ETF strategies, portfolio management at BNPP AM, added: "[The ETFs] 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 to the different sustainability label criteria."

The new arrivals come after ETF Stream revealed the firm had launched Irish domiciled iterations of the BNP Paribas Easy MSCI World ESG Filtered Min TE UCITS ETF and the BNP Paribas Easy ECPI Global ESG Infrastructure UCITS ETF last July.


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