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BNP Paribas’s THEAM subsidiary on path to ETF growth

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THEAM, the BNP Paribas Investment Partners’ subsidiary specialising in capital-protected, indexed and model-driven management, aims to triple its ETF assets by 2020. 

Isabelle Bourcier, the newly arrived Head of ETF and Indexed Fund Activities charged with accelerating the growth of THEAM’s business in these areas, explains that the asset manager has been in indexed fund management since 1989 and ETFs since 2005. The ETFs were in a product range called EasyETFs, now renamed to BNP Paribas Easy.
 
Bourcier, who arrived on 1st  June, came into a team that was managing EUR14.7 billion (as at 30th June). “The plan is to grow the business,” Bourcier says. “We are developing the product range on the ETF side and also adding a dedicated sales team focused on developing the penetration of our ETF and index solutions franchise in a number of countries, starting with our home market, the French market.  We recently hired Claus Hecher to develop the business in German-speaking countries.”
 
Hecher was head of distribution for Germany for iShares between 2008 and 2012 and will be leading the development for German speaking countries starting with Germany and then moving on to Austria and the Swiss German speaking parts of Switzerland.
 
The asset manager is also looking to recruit to build this business in Italy, while 2018 will see the products sold through Belgium, Luxembourg, the Netherlands, the Nordics and possibly into the UK.
 
“A number of our products have been in the product range from very early days and are based on traditional indices, such as our large ETF based on the STOXX Europe 600, which is the second largest ETF in Europe covering this index, but in terms of product development we will focus on smart beta – it’s part of the DNA of THEAM.”
 
The asset manager has recently launched a range of single factor ETFs based on the BNP Paribas smart beta indices which offer allocations based on factors such as low volatility, quality, momentum or value.
 
ESG or SRI investing is also important to the asset manager with a commitment that companies involved in the production of cluster bombs, mines, chemical and biological weapons and weapons using enriched uranium are excluded from the selection through an ETF tracking the MSCI ex Controversial Weapons indices. The asset manager has also recently launched new ETFs on emerging markets and the US and Bourcier comments that historically the bank was the first to launch a low carbon ETF, in 2008. “It’s part of BNP Paribas Group’s global messaging as responsible investors,” she says.
 
“Smart beta is important to us.  In an ETF format it is an efficient diversification tool for investors. Professional investors have been using ETFs for geographical diversification historically and then sector/thematic diversification.  More recently diversification has been progressively available across factors,” Bourcier says.
 
“Investors can use single factor ETF in various ways including for correcting the factor bias of their own portfolios or specifically looking for a factor tilt. Within smart beta a lot of assets were driven to low volatility in recent years simply because a lot of asset allocators were looking for equity exposure with less volatility.”
 
Wealth managers are increasingly using ETFs and Smart Beta ETFs. Bourcier finds that ETFs based on the quality factor allow retail investors to be invested in companies that have profitable business models and good financial health. “If you are managing money for a retail investor, you want an allocation to those types of stocks through a quality ETF,” she says.
 

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