ESG investors flock to BNP money market funds for stable returns
BNP Paribas Asset Management reports that ESG clients increasingly investing in money market funds because they are attracted to the stable returns offered by cash-like instruments.
There’s “lots of cash” to move around, and clients are reacting to “the volatility of the market in general,” said Thibault Malin, an investment specialist at the fund management arm of Europe’s biggest bank.
At BNPP AM, assets in money market funds grew by 33% last year, reaching slightly over €105 billion ($114 billion). Additionally, there was an influx of €5 billion in January.
Most of this increase came from new investments in 12 open-ended funds registered as Article 8, which endorse environmental, social, and governance goals as per EU regulations.
Also read: West Virginia threatens blacklisting of six major banks over ESG policies
For its money funds, BNPP AM mainly invests in short-term debt issued by financial institutions with high ESG scores, which are part of an ESG index.
Some of the issuers whose securities are held in the asset manager’s funds include Barclays Plc, Credit Agricole SA, Sumitomo Mitsui Banking Corp., ING Groep NV, and Standard Chartered Plc.
“It’s actually been the second consecutive year where we continue to see inflows in money market funds over January,” Malin said. He added that less than 10% of the net new cash came from clients exiting positions in other products.
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