BNP Paribas has launched two new ETFs providing exposure to European and Japanese equities with strong environmental, social, and corporate governance (ESG) characteristics. The new funds, which select constituents based on data from MSCI ESG Research are available to trade on Xetra and Börse Frankfurt.
BNP Paribas launches two ESG ETFs.
The BNP Paribas Easy MSCI Europe SRI UCITS ETF (ZSRI GR) tracks the MSCI Europe SRI Index. The index is constructed by applying a combination of values-based exclusions and a ‘best-in-class’ selection process to companies that make up the MSCI Europe Index.
The parent MSCI Europe Index covers large- and mid-cap stocks across 15 developed market countries in Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The SRI index is designed for investors seeking a diversified socially responsible investment (SRI) benchmark.
First, companies involved in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment are excluded from the parent index.
MSCI’s best‐in‐class selection process is applied to the remaining eligible securities in the selection universe. This involves evaluating the remaining constituents according to MSCI’s ESG Intangible Value Assessment, which identifies companies that have demonstrated an ability to manage the ESG risks and opportunities relevant to the sector the firm operates within.
The MSCI SRI indices target sector and region weights consistent with those of their parent indices so as to limit the systematic risk introduced by the ESG selection process. The methodology aims to include the securities of companies with the highest ESG ratings making up 25% of the market capitalization in each sector and region of the parent index.
The index is float-adjusted market capitalisation weighted and has 118 constituents. The largest country exposures are France (22.2%), the UK (18.3%), Germany (14.8%), Switzerland (10.6%) and the Netherlands (9.6%). The largest sector exposures are financials (19.2%), consumer staples (14.2%), healthcare (13.6%), industrials (11.8%), and consumer discretionary (9.2%).
The fund has a total expense ratio (TER) of 30bps.
The second fund launched by BNP Paribas is the BNP Paribas Easy MSCI Japan SRI UCITS ETF (JSRI GR) which tracks the MSCI Japan SRI Index. The index follows a similar process as the above index while utilizing constraints to ensure it does not differ significantly from the parent MSCI Japan Index.
There are just 65 holdings in the MSCI Japan SRI Index, compared with 321 in its parent index. Consumer discretionary is the largest sector at 23.8%, followed by industrials (17.4%), information technology (13.6%), materials (9.4%) and telecommunications (9.4%).
The fund has a TER of 30bps.
In November 2017, BNP Paribas launched the BNP Paribas Easy MSCI KLD 400 US SRI UCITS ETF (EKUS FP) and the BNP Paribas Easy MSCI Emerging Markets SRI ETF (EISR FP). The funds apply the same MSCI SRI-screening methodology to the US and emerging markets equity universes. EKUS has a TER of 0.30bps while EISR costs 45bps.