Exchange-traded Funds  

BNP Paribas unveils three ETF tracker funds in expansion bid

BNP Paribas unveils three ETF tracker funds in expansion bid

BNP Paribas Asset Management is expanding its smart-beta exchange traded funds (ETF) range with the launch of three tracker funds.

The company said the funds were designed for investors seeking access to the potential yield of high dividend shares in the US or Europe, or to undervalued US shares.  

The new funds, listed on Pan-European exchange Euronext Paris and Frankfurt-based electronic trade system Xetra, increase the number of smart beta ETFs in the BNP Paribas Easy range to 14.

BNP Paribas Easy Equity Dividend US Ucits ETF and BNP Paribas Easy Equity Dividend Europe Ucits ETF replicate the performance of strategy indices developed by BNP Paribas.

That is, investing in a basket of liquid shares that can pay high, stable and sustainable dividends.

The strategy indices have been developed by BNP Paribas research teams. They are calculated, maintained and published by German multi-asset class index provider Solactive AG.   

BNP Paribas Easy Equity Value US Ucits ETF replicates the performance of a strategy index that offers exposure to the potential performance of a basket of US shares considered to be undervalued according to fundamental analysis criteria.

Smart Beta ETFs are growing in popularity in Europe.

They already account for 8 per cent of the assets invested in ETFs and the growth outlook remains positive, with an average of 10 to 15 per cent of monthly net inflows into ETFs in Europe directed to these types of products.

For this reason, Jose Garcia-Zarate, associate director ETF Research, predicts that over the coming years, ETF providers will consider smart beta as one of their key business areas.

 

Provider view:

Isabelle Bourcier, head of ETF and index activity at BNP Paribas Asset Management, said: "The launch of these three new ETFs underlines our desire to continue expanding our range of smart-beta investment solutions and meets genuine client demand for portfolio diversification.  

“The continued development of our smart beta range draws on the recognised expertise of our indexed fund research and management teams, as well as competitive management fees.”

     

Adviser view:

Scott Gallacher, director at Rowley Turton, said: “Smart Beta appears to be the latest investment fad. On one hand it could be argued its combines the best of both worlds, that is a screened investment selection based on identified historical trends, coupled with lower cost tracking.

“However, if you take the view that historical trends can be identified, and are likely to be repeated in such a way that you can profit from that knowledge, then surely these lead you down the road of active management. In which case why would you wanted to be tied to just the smart beta world rather than full active management?

“That said, the BNP ETFs appear competitive and will no doubt find favour with some investors.”

 

Charges:

There is an annual fee of 0.3 per cent.

 

Verdict:

These type of smart beta ETFs are another way of looking for high yielding assets without having to engage with a fund manager, and they are growing in popularity.