(l-r) Marie-Sophie Pastant and Lorraine Sereyjol-Garros announced BNP Paribas Asset Management’s launch of two new ESG-active fixed income ETFs on Tuesday, emphasising the integration of sustainable investing practices with indexing expertise for a responsive and flexible investment approach. Photos: BNP Paribas Asset Management; Montage: Maison Moderne

(l-r) Marie-Sophie Pastant and Lorraine Sereyjol-Garros announced BNP Paribas Asset Management’s launch of two new ESG-active fixed income ETFs on Tuesday, emphasising the integration of sustainable investing practices with indexing expertise for a responsive and flexible investment approach. Photos: BNP Paribas Asset Management; Montage: Maison Moderne

BNP Paribas Asset Management has broadened its sustainable investing efforts by launching two ESG-active fixed income ETFs, aiming for strict sustainability compliance and innovative, adaptable investment solutions.

BNP Paribas Asset Management announced two new fixed income exchange-traded funds incorporating an active environmental, social and governance strategy. The launch, which took place on 20 February, saw the BNP Paribas Easy Sustainable EUR Corporate Bond and BNP Paribas Easy Sustainable EUR Government Bond begin trading on Borsa Italiana and Deutsche Börse Xetra. These sub-funds, part of the BNP Paribas Easy Luxembourg Sicav, represent the first offerings in what is planned to be a broader range of fixed income ETFs by the firm, the press release .

The newly launched ETFs apply an index-like strategy while integrating BNPP AM’s proprietary approach to sustainability, aiming to offer investors the benefits of both ESG methodology and active engagement, the firm said. This approach allows for the potential adaptation to future regulatory changes, underlining the firm’s commitment to sustainable investment practices, BNPP AM stated.

Marie-Sophie Pastant, head of index and ETF strategies portfolio management at BNPP AM, emphasised the fusion of the firm’s bespoke sustainable methodology with its indexing expertise. She highlighted the flexibility of the new range in responding to diversification and adapting to changes in the sustainability landscape, facilitating compliance with various sustainability label criteria.

The BNP Paribas Easy Sustainable EUR Corporate Bond, classified as an article 9 fund under the sustainable finance disclosure regulation, commits to 100% sustainable investments. Its benchmark, the Bloomberg Euro Aggregate Corporate, is an investment grade bond index with an average duration of 4.4 years. On the other hand, the BNP Paribas Easy Sustainable EUR Government Bond, an article 8 fund, targets a sustainable investment threshold of at least 30%. Its benchmark is the JP Morgan EMU Investment Grade Index, also an investment-grade bond index, but with a longer average duration of 7.1 years.

Both funds aim to achieve performance comparable to their respective benchmarks while allowing for deviations in portfolio weightings due to the application of BNPP AM’s ESG integration approach. This may result in the exclusion of certain benchmark index components from the funds’ investments, BNPP AM clarified.

Lorraine Sereyjol-Garros, global head of development for ETFs and index funds at BNPP AM, highlighted the significance of fixed income investments in 2024’s challenging market environment. She pointed out the advantages of active ESG fixed income management through ETFs, including diversification, sustainable credentials and affordability, in building investment portfolios.

BNPP AM manages assets totalling €48.5bn across its ETF and index fund offerings, which include thematic and sustainable products, while its fixed income index fund range encompasses 14 ETFs.

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