BNP Paribas Asset Management has launched two new fixed income ETFs targeting eurozone and emerging market government bonds while tilting towards countries with enhanced environmental, social and governance credentials.
The funds are referenced to JP Morgan indices that harness data from Sustainalytics, RepRisk, and the Climate Bonds Initiative to overweight green bond issues or issuers ranked higher on ESG criteria, and to underweight or remove issuers that rank lower.
A country’s ESG rank reflects a mix of qualitative and quantitative analysis including values-based screening, such as participation in controversial weapons and thermal coal; norms-based screening, such as evidence of illegal activities, human rights violations, and disregard for UN Global Compact principles; and positive screening, which rewards countries with robust ESG business practices.
Eurozone
The BNP Paribas Easy JPM ESG EMU Government Bond IG 3-5Y UCITS ETF tracks the JP Morgan ESG EMU Government Bond IG 3- 5 Year Index.
The index consists of fixed-rate and zero-coupon government bonds issued by Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal, and Spain. Eligible issues must be rated investment-grade and have a minimum amount outstanding of €1 billion and a remaining time to maturity between three and five years.
The fund comes with an expense ratio of 0.15%. It is available to trade in euros on Deutsche Börse Xetra (ASRE GY) and Euronext Paris (GEMU FP).
Emerging markets
The BNP Paribas Easy JPM ESG EMBI Global Diversified Composite UCITS ETF tracks the JP Morgan ESG EMBI Global Diversified Index.
The index consists of fixed and floating-rate debt instruments denominated in US dollars and issued by sovereign and quasi-sovereign emerging market issuers. Eligible bonds have at least 2.5 years remaining to maturity and a face value of at least $500 million outstanding.
Whole countries can be removed from the index universe if their Gross National Income per capita is above JP Morgan’s Index Income Ceiling or if its long-term foreign currency sovereign credit rating is “A-“ or above for three consecutive years.
The fund comes with an expense ratio of 0.25%. It is available on Xetra (ASRC GY) in euros and on Euronext Paris in euros (EMBH FP) or US dollars (EMBI FP).
Income is capitalized within both portfolios.