BNP Paribas AM targets essential services access with social bonds fund – citywireselector.com

BNP Paribas Asset Management has launched a dedicated social bonds fund to tap into the fastest growing segment of the sustainable bond universe.

The Article 9-classified BNP Paribas Social Bond fund will be managed by Arnaud-Guilhem Lamy, who is head of euro aggregate bond strategies at BNP Paribas AM.

It will invest a minimum of 75% in social or sustainable bonds that promote access to essential services such as water, health, affordable housing, employment, food security, socio-economic progress or basic infrastructure. 

By utilising a social inclusion rating model, the fund will invest up to 25% in bonds issued by socially responsible companies.

A maximum of 10% of the fund is dedicated to providing small businesses and individuals in emerging markets with access to financial services through microcredit instruments.

The fund is registered for sale in Belgium, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Spain and Switzerland.

It will be benchmarked against the Bloomberg Barclays Global Treasury Euro Hedged 3-7 years and has a synthetic risk and return indicator of 3.

‘The growing importance of bonds within thematic management, historically more geared towards equities, and the emergence of social considerations among investors are two major developments in our industry.

‘The launch of BNP Paribas Social Bond fund enables capital to be directed towards activities with a positive social impact, such as unemployment benefit programmes or social housing. 

‘Our rigorous methodology brings real added value, by evaluating not only the quality of the issuer but also that of the projects being financed,’ Lamy said.

Social bonds accounted for 30% of total green, social and sustainability bonds in 2020, a growth largely attributable to sovereign or quasi-sovereign issuers and the surge in social bond programmes to finance inequality-fighting projects.

While still a miniscule part of the impact investment universe, other social bonds strategies are slowly popping up in the asset management industry.

Amundi, launched a similar strategy in December last year, while Columbia US and Threadneedle UK caught the trend early and released social bond strategies already in 2015 and 2017.