BNP Paribas Asset Management has launched two US dollar and euro-denominated corporate bond fossil free SRI ETFs, ETF Stream can reveal.
The BNP Paribas Easy € Corp Bond SRI Fossil Free Ultrashort Duration UCITS ETF (BJLI) and the BNP Paribas Easy USD Corp Bond SRI Fossil Free UCITS ETF (BJLJ) are listed on the Deutsche Boerse, Euronext Paris and Borsa Italiana with total expense ratios (TERs) of 010% and 0.20%, respectively.
BJLI physically replicates the Bloomberg MSCI Euro Corporate Ultrashort Fixed and Floating Rate SRI Bond index of approximately 400 euro-denominated, investment grade corporate bonds with an average maturity of 0.7 years.
Bonds must have at least €500m outstanding to be eligible for inclusion. Fixed rate bonds must have between one and 18 months to maturity while floating rate bonds must have between one month and three years to maturity to be included.
BJLJ physically replicates the Bloomberg MSCI US Corporate SRI Sustainable ex Fossil Fuel Bond index of 3,400 US dollar-denominated, fixed rate, investment grade bonds with at least $500m outstanding and an average duration of 6.8 years.
Both ETFs exclude issuers from their respective parent aggregate corporate bond indices with ‘red’ MSCI controversy scores and business activities involved in alcohol, tobacco, gambling, adult entertainment, genetically modified organisms, nuclear power and weapons, civilian firearms, controversial weapons, thermal coal and fossil fuels.
The ETFs are categorised Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).
The products rebalance monthly to match the sector, maturity, yield-to-maturity, coupon and average credit rating exposure – for eligible sectors – of their parent indices.
Lorraine Sereyjol-Garros (pictured), global head of development for ETFs and index funds at BNPP AM, told ETF Stream: “Clients want sustainable strategies with low tracking error versus the parent index.
“We decided to fill out our range of fixed income SRI ETFs on the back of strong client demand for both index-based and active fixed income, as well as continued demand ESG and SRI solutions. The ETF market also lags the active product market, so there is still room for more building blocks.”
The two new ETFs are the latest additions to the firm’s fixed income ESG range following the launch of the BNP Paribas Easy Euro Aggregate Bond SRI Fossil Free UCITS ETF (BJLF) and BNP Paribas Easy JPM ESG EMU Government Bond IG 1-3Y UCITS ETF (BJLH) in March.
The ETFs are domiciled on BNPP AM’s Luxembourg SICAV platform, with equivalent mutual funds having launched on the platform on 6 September.
“This does not mean that in the future we will not launch fixed income ETFs on the Irish ICAV down the line.
“In 2024, we will likely launch fixed income ETFs on the ICAV but it will be positioned for a different kind of clients,” she concluded.