Great expectations: investors bet on alpha in new rates regime

London, New York, Hong Kong – 12 February, 2024 – BNP Paribas, Europe’s leading global bank, and its Prime Services business published today its annual 2024 Alternative Investment Survey.

BNP Paribas’ Capital Introduction Group surveyed 238 allocators in December 2023 and January 2024, who invest or advise on $1.2 trillion in hedge fund assets. This amount represents about one-third of industry assets under management (HF AUM).

Ashley Wilson, Global Head of Prime Services at BNP Paribas, said: “BNP Paribas credit prime platform is well positioned to support the continued growth of credit strategies as highlighted in our survey this year. We have integrated repo into prime enhancing our borrow and financing solutions which will help our clients execute their strategies and deliver returns to their investors. We are encouraged to see more allocators considering quant multi strategy, as these managers have clearly differentiated themselves in the past three years, however limited capacity in these funds will remain an obstacle for investors akin to that of the larger multi manager platforms.”

Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, added: “Allocators are starting to position for an era where alpha and diversification are finally expected to deliver strong returns, as they anticipate a departure from the past decade’s US equities dominance. Whether through asset allocation changes or a portable alpha implementation, this pivot spells opportunity for hedge funds.”

Key findings of BNPP’s Alternative Investment Survey:

Hedge fund performance: 2023 flipped 2022 on its head

In 2023, the market soared with the MSCI World returning 24% whilst hedge funds returned 7.6%; contrasting 2022 when the market struggled and hedge funds protected capital.
Equity long/short focused on Americas or TMT led the way for most of our responding investors as the best performing strategy – precisely what had struggled most the year before.
Conversely, discretionary macro and CTAs were the worst performers in respondents’ portfolios, having topped the charts in 2022.
Over the full 24 month period (2022 and 2023), the average hedge fund outperformed global equity markets by 5.72%.

Investors back hedge funds as we shift into the alpha era

For most of the past decade, hedge funds faced headwinds to generate alpha as a result of zero interest rates and subdued volatility. In 2023, respondents reported that their hedge fund portfolios returned 6.67%, 1.5% shy of their target return.
Historical analysis shows hedge funds perform well in periods of high, stable rates, as a result survey respondents have pushed up their return targets by 161bps since 2022 from 7.45% to 9.06%; the highest level it’s been at in more than 10 years as they ancipate moving into a high stable rate environment: the alpha era

Perhaps unsurprising given (1) hedge fund underperformance versus their expected returns in prior years, (2) investors taking profits from their hedge funds to rebalance their portfolios following 2022 outperformance versus other investments and (3) five percent risk free rates, last year saw up to US$100 billion of net outflows.
Nevertheless, for the year ahead, almost half of our respondents are looking to contribute to hedge funds, expecting to add $17bn on a net basis in 2024 up 70% from the $10 billion net they added in 2023.

Credit remains the most sought-after strategy

Continuing the trend from our survey last year, credit strategies remain the most sought after in 2024 with 33% of respondents looking to add on a net basis.
As predicated in our 2023 survey, credit was the number one strategy allocators added to last year; however, the Capital Introduction team did not observe allocators investing as many dollars as they planned to. Only 21% of respondents surveyed added to credit in 2023, whereas in our survey last year 48% had intended to do so.

China exodus slowing down in 2024

The world’s second largest economy has slowed down in recent years, following the Covid pandemic and the more recent crash in the property market.
Last year, 42% of investors on a net basis pulled capital from China-focused hedge fund managers.
This exodus of capital is expected to slow down in 2024, with only 6% of investors on a net basis looking to redeem.

SMAs on the rise

One quarter of our survey respondents invest in some of their hedge funds via separately managed accounts (SMAs), this accounts for over one third of their hedge fund assets.
This is expected to grow in 2024 with 13% of allocators looking to add to hedge funds via an SMA structure, with half of these being first time SMA allocators.

Hurdle rates are a priority

The BNP Paribas Capital Introduction team has noted the increased demand for hurdle rates when speaking with investors, as part of the performance versus risk free rate discussion.
28% of respondents scored hurdle rates as high priority when making new allocations.
Of those who ranked hurdle rates as high priority, respondents have 31% of their portfolio, by assets, invested with a hurdle rate whilst the average respondents has 19% of their portfolio invested with a hurdle.
Nonetheless investors remain focused on better aligned fee structures with almost three quarters of responding investors saying they would overlook their preferred fee structure in favour of managers with outstanding performance, whilst only 9% said they would under no circumstances allocate without a favourable fee structure in place.

Multi manager platforms in the spotlight

On one hand, some investors expect more consolidation of the hedge fund industry into multi manager platforms as well as acquisitions amongst multi manager platforms. It follows that the war for talent will continue to be waged through increased pay-outs, there will be fewer independent launches, more fund closures and investors will battle for access resulting in further proliferation of restrictive liquidity and higher fees.
On the other hand, some investors believe single managers will once again find their value proposition and expect a reversal of flows away from multi managers. These allocators question whether liquidity and fees are commensurate with returns and risk.
Investor share amongst pass-through structures dips below 50% while managers with no pass-through fees outperform in 2023 on a net basis reversing the trend from the previous two years.

Quant multi strategy: An alternative or complement to multi manager platforms

Quant multi strategy and quant equity market neutral funds have similar risk return, beta and diversification profiles to multi manager platforms and are less impacted by the war for talent.
Over the past 3 years these managers have delivered strong uncorrelated returns, annualizing low double digits and some allocators are noticing.
Given there is a meaningful percentage allocated to quant in many multi manager platforms, the decision not to invest in quant for lack of understanding the “black box” if you do invest in multi managers should provide food for thought for allocators.

Of the respondents, Institutional end investors account for 25% of respondents and 30% of HF AUM [60 investors / US$ 357 billion], Intermediaries account for 37% of respondents and 58% of HF AUM [89 investors / US$ 702 billion], and Private investors account for 37% of respondents and 12% of HF AUM [89 investors / US$ 143 billion].

The survey included respondents from EMEA (42% of respondents with 30% of HF AUM), Americas (50% of respondents with 63% of HF AUM), and APAC (8% of respondents with 7% of HF AUM). The objective of the report is to better understand sentiment regarding performance and asset allocation plans to hedge funds and other alternative investments.

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Press Contact:

Murray Parker

Media Relations

+44(0)7818 510 056

murray.parker@uk.bnpparibas.com

About BNP Paribas

BNP Paribas is the European Union’s leading bank and key player in international banking. It operates in 65 countries and has nearly 190,000 employees, including nearly 145,000 in Europe. The Group has key positions in its three main fields of activity: Commercial, Personal Banking & Services for the Group’s commercial & personal banking and several specialised businesses including BNP Paribas Personal Finance and Arval ; Investment & Protection Services for savings, investment and protection solutions ; and Corporate & Institutional Banking, focused on corporate and institutional clients. Based on its strong diversified and integrated model, the Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, BNP Paribas has four domestic markets: Belgium, France, Italy and Luxembourg. The Group is rolling out its integrated commercial & personal banking model across several Mediterranean countries, Turkey, Eastern Europe as well as via a large network in the western part of the United States. As a key player in international banking, the Group has leading platforms and business lines in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.

BNP Paribas has implemented a Corporate Social Responsibility approach in all its activities, enabling it to contribute to the construction of a sustainable future, while ensuring the Group’s performance and stability.

London, 29 September 2022 – BNP Paribas UK has announced a three-year sustainability education partnership with Teach First, the charity fighting to make the education system work for every child.

The ‘Leaders for a Changing World’ Teach First programme will run from 2022 to 2025, enabling Teach First to support 14,000 young people through the recruitment, training and placement of 110 teachers across Teach First’s partner schools, which specifically serve disadvantaged communities across England.

The programme also centres on delivering a series of four sustainability lessons, strategically aligned with the school curriculum lessons across a range of subjects and age groups, produced in partnership with Gemserv, a B Corp certified environmental consultancy. The resources will be freely available to all teachers in the UK, accessible via the online teaching platform Times Education Supplement (TES) and includes:

Sustainable Financing for a Net Zero Future
Powering a Net Zero Future
Sustainable City Design
Sustainable Lifestyles for Climate Action

Currently over a third of children in the UK are living in poverty, with only 46% of these children reaching the expected levels of English and Maths by the time that they leave primary school. Through the ‘Leaders for a Changing World’ Teach First partnership, BNP Paribas UK, Gemserv and Teach First are investing in the education of children and driving the sustainability curriculum in schools to inspire and equip the next generation towards a net zero future.

Russell Hobby, CEO Teach First explained, “The burdens of the future, particularly those relating to climate change and the environment, will be disproportionately felt by today’s young people, and especially those in low-income communities. This collaboration with BNP Paribas and Gemserv will work to widen access to education about sustainability and equip young people with skills and knowledge to combat these challenges”.

Anne Marie Verstraeten, UK Country Head, BNP Paribas highlighted “Our commitment over the next 3 years will enable Teach First to continue training and recruiting great teachers for schools serving disadvantaged communities, whilst working to inspire future generations with the skills and knowledge they need to help tackle sustainability challenges as part of the future workforce.”

Clare Jackson, Head of Innovation, Low Carbon, Gemserv emphasised, “Tackling climate change is arguably the challenge of our lifetimes. The Gemserv Low Carbon Business Unit are proud to bring our knowledge to the partnership to help educate the future generations who will be crucial in continuing efforts to reduce our emissions and providing high-quality content for teachers that ties in with the existing curricula.”

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Notes to editors

Press Contacts:

BNP Paribas UK:

Lucinda Kemeny

0207 595 1253

Lucinda.Kemeny@uk.bnpparibas.com

Teach First Press and Media team

press@teachfirst.org.uk

0203 841 8483

Gemserv:

Jordan Shuttleworth

+44 203 934 3565

jordan.shuttlewood@gemserv.com

About BNP Paribas

In Europe, BNP Paribas has four domestic markets: Belgium, France, Italy and Luxembourg. The Group is rolling out its integrated retail-banking model across several Mediterranean countries, Turkey, Eastern Europe as well as via a large network in the western part of the United States. As a key player in international banking, the Group has leading platforms and business lines in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific. BNP Paribas has implemented a Corporate Social Responsibility approach in all its activities, enabling it to contribute to the construction of a sustainable future, while ensuring the Group’s performance and stability.

About Teach First

Teach First is an education charity which is fighting to make our education system work for every child. Backing the schools facing the toughest challenges, the charity finds and trains teachers, develops their leadership teams and plugs them into networks of diverse expertise and opportunities to create real change. The charity has now placed over 15,000 teachers and leaders, has over 100 head teachers in their Training Programme alumni and has supported over two million pupils. Those on the Training Programme commit to a minimum of two years at their partner school – gaining a fully funded Postgraduate Diploma in Education and Leadership (PGDE) and earning a salary whilst they train. More than half then stay on for a third year, where they have the option to top up their qualification to a master’s. Over 60% of all the teachers who’ve completed training since 2003 are currently teaching. As well as recruiting new teachers into the profession, the charity provides a range of support for schools, including programmes to help develop teachers at every stage of their career. Teach First currently operates in all regions across England: London, West Midlands, East Midlands, Yorkshire the Humber, North West, North East, South East, South Coast, South West and the East of England.Gemserv Consulting LLP (Gemserv) are at the forefront of developments in the energy and environmental sectors, focusing on delivering meaningful impact on the journey to reducing emissions and reaching Net Zero in the UK. This comes through a range of projects, from running government schemes to education about the environmental benefits of technologies.

About Gemserv

Gemserv is at the forefront of developments in the energy and environmental sectors, focusing on delivering meaningful impact and market transformation supporting the journey to a low carbon economy. We deliver impact working across a wide a range of projects, from implementation and policy delivery and management of trade associations through to education and communication about the environmental benefits of technologies.

Gemserv has a long track record of working with BNP Paribas to great effect, developing the hugely successful Fuel Cells Education Pack alongside Arval and BNP Paribas. This collaboration saw over 46,000 lesson downloads with a 5* rating from teachers. We are excited at the opportunity to build upon these previous successes as BNP Paribas looks to take its work in education to the next level alongside Teach First. Drawing on our industry knowledge, we are working with both organisations to develop learning materials to support teachers and students.

Bank makes first investment in FinTech venture capital fund, Anthemis

London, April 13, 2022 – BNP Paribas, Europe’s leading financial institution, today announces its first investment into Anthemis, a global investment platform and category leader in FinTech.

The investment is being made through the Global Markets Strategic Investments unit, which invests in high growth FinTech companies. The investment is part of the Bank’s strategy to partner with innovative technology companies to transform their value chain and provide an industry leading service to its clients. This investment further strengthens the current portfolio of FinTech investments made by Global Markets, which includes the likes of Kantox, Symphony, Saphyre and Forge (digital and FinTech firms). BNP Paribas is a solid supporter of innovation in the financial services sector, providing a market leading incubation centre and partnership model for external industry innovators.

Olivier Osty, Head of Global Markets at BNP Paribas, said “We are delighted to be investing in Anthemis which has a strong track record in FinTech investments. We are not only investing in the fund but also looking at potential partnerships and co-investment opportunities which will support the capital markets industry and develop the next generation of FinTech champions.”

Anthemis was founded in 2010 with a primary focus on FinTech and InsurTech sectors and has built up a large portfolio of successful start-ups including eToro, the world’s largest social trading and investment network and Azimo, and international online money transfer company.

Anthemis Chief Executive Officer Briana van Strijp, said, “For over a decade, Anthemis has been committed to reshaping financial services, cultivating change by investing in, growing, and sustaining businesses committed to improving the world. This work cannot be done without partners like BNP Paribas. We couldn’t be more excited to work alongside BNP Paribas whose leadership embodies this.”

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Press Contacts:

Lucinda Kemeny

+44(0)7881 249 764

Lucinda.Kemeny@uk.bnpparibas.com

Sarah Shephard

+44(0)7468 471 044

Sarah.Shephard@uk.bnpparibas.com

About BNP Paribas

Investors seek low beta strategies to protect against rising inflation

Multi-strategy predicted to be the best performing with the second highest net inflows in 2022

New York, London, Hong Kong – 2 March, 2022 – BNP Paribas, Europe’s premier global bank, and its Prime Services business published today its 2022 Alternative Investment Survey: “The Hedge Fund Booster.” BNP Paribas’ Capital Introduction team surveyed 224 allocators in December 2021, which invest or advise on $1.2 trillion in hedge fund assets. This represents approximately one-third of industry assets under management. The report provides insight to better understand investor sentiment with respect to performance and asset allocation plans for hedge funds and other alternative investments.

Ashley Wilson, Global Head of Prime Services at BNP Paribas, said: “The hedge fund outlook for 2022 is optimistic with the average allocator in our survey looking to add almost a quarter of a billion dollars to hedge funds. We at BNP Paribas have built a world-class multi-asset prime services platform that is well-positioned to support this growth and achieve our ambition in becoming the largest European Prime Broker to global hedge funds. We are pleased to present these findings and grateful to all investor participants, clients and colleagues for their continued support.”

Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, said: “With rising rates and geopolitical uncertainty, our report shows that investors are increasing their allocations to low beta hedge funds that can achieve high single-digit returns. The strong net asset inflows we expect to see in 2022 will be met with some volatility as investors reallocate capital from traditional long only funds into hedge funds, move some capital out of hedge funds into private markets as well as rotate capital within the hedge fund space. We would like to thank our investor relationships globally for taking the time to participate in this survey and provide us with these invaluable insights.”

This marks the inaugural survey since the completion of the transfer of Deutsche Bank’s Global Prime Finance and Electronic Equities businesses to BNP Paribas. The migration of clients, technology and around 900 key staff globally was successfully completed at the end of 2021. This platform, along with the acquisition of Exane and the referral agreement to provide continuity of service to clients of Credit Suisse’s Prime Services and Derivatives Clearing business, enable BNP Paribas to offer clients globally a strong alternative to the US banks in Prime Services and Global Equities.

Key findings of BNPP’s Alternative Investment Survey:

The hedge fund booster

The hedge fund outlook for 2022 is optimistic as investors seek to inject a further dose of capital into low beta strategies to protect against rising inflation.
Over half of investor respondents plan to grow their hedge fund portfolio in 2022, with the average respondent looking to increase hedge fund exposure by US$244 million at the expense of long only funds across equity, credit and fixed income.
Investors are expected to have met their return target for their hedge fund portfolio last year (average target of 8.32%), with 62% of respondents having already met this by end-November 2021, including 29% of which exceeded.

The rise of the e-investor: allocators adapt to the pandemic

Three in every five respondents completed all due diligence virtually for previously unknown managers since the pandemic began.
Three-quarters of survey participants made new allocations to previously known managers by completing some due diligence virtually.

It’s all about the multi-strat

Multi-strategy is predicted to be the best performing strategy in 2022 after being the second best last year, falling short to event-driven.
Multi-strategy is expected to see the second highest net inflows this year, following specialist equity long / short funds.

The quant comeback

Quant equity and quant multi-strategy are expected to make a comeback with over one in ten investors looking to add to the space.
These strategies outperformed the overall hedge fund industry last year having underperformed the previous three years.

The dawn of Eurasia

Asia Pacific and Europe are the most sought after regions for 2022.
Investors look to increase exposure to equity long / short funds in both these regions and have also expressed interest in expanding their European credit exposure.

Intermediaries drive the growth of customisation

45% of investors have customised mandates with managers up from 31% two years ago.
Investment consultants report customisation for over half of their hedge fund assets and expect this to grow to two-thirds within the next five years. For fund of funds this is currently about one-third and expected to grow to almost half of their allocations by 2027.

The crypto creep

23% of investor respondents invest in cryptocurrency strategies with 15% expecting to increase their investment in 2022 and a further 29% of investors who do not currently invest looking to do so.
Investors are still research-gathering and are focused on understanding alpha generation opportunities versus crypto beta, how best to position within their portfolio and the correct fee structure.

The green dollar strengthens as investors continue to drive the ESG agenda

One-third of investor respondents’ state that they invest in ESG dedicated strategies with one-fifth of investors planning to increase this in 2022. A further 23% of investors are considering an investment.
Diversity and inclusion remains an area of focus with 38% of respondents reporting investing in women and minority owned managers, up from 21% five years ago. 18% of respondents expect to grow this in 2022 while 20% of respondents are considering investing for the first time.

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Press Contacts:

BNP PARIBAS

Robert Madden

+1 (332) 323-3704

Robert.Madden@us.bnpparibas.com

Sarah Shephard

+44(0)7468 471 044

Sarah.Shephard@uk.bnpparibas.com

About BNP Paribas

BNP Paribas is the European Union’s leading bank and key player in international banking. It operates in 68 countries and has more than 193,000 employees, including nearly 148,000 in Europe. The Group has key positions in its three main fields of activity: Retail Banking for the Group’s retail-banking networks and several specialized businesses including BNP Paribas Personal Finance and Arval; Investment & Protection Services for savings, investment and protection solutions; and Corporate & Institutional Banking, focused on corporate and institutional clients. Based on its strong diversified and integrated model, the Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realize their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, BNP Paribas has four domestic markets: Belgium, France, Italy and Luxembourg. The Group is rolling out its integrated retail-banking model across several Mediterranean countries, Turkey, Eastern Europe as well as via a large network in the western part of the United States. As a key player in international banking, the Group has leading platforms and business lines in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.

‘Bridge by BNP Paribas’ to Provide Digital Capital Introduction Services for Institutional Investors

Strengthens and widens the bank’s capital introduction offering and the range of innovative Prime Services solutions BNP Paribas offers to institutional investors globally

New York, London, Hong Kong, February 10, 2022 – BNP Paribas, Europe’s leading financial institution, today announces the launch of ‘Bridge by BNP Paribas’ – the bank’s digital capital introduction platform, offered exclusively to institutional investors and hedge fund clients serviced by the bank’s Prime Services business. The platform will complement the bank’s Capital Introduction team of specialists and deepen their diverse set of global investor relationships, market knowledge and expertise.

‘Bridge by BNP Paribas’ is powered by Edgefolio, a leading tech provider for the fund distribution and asset management industries. The platform enables institutional investors to browse and connect with the bank’s prime services hedge fund clients by using customized search functions to match with specific preferences and criteria in areas like strategy type, region, sector, assets, age, performance and volatility.

‘Bridge by BNP Paribas’ also provides the bank’s institutional investor and hedge fund clients with a view of their previous introductions, suggestions on similar funds to the ones they have already been introduced, access to exclusive market content and insights and monthly hedge fund performance updates.

Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, said: “The past two years have shown us that adaptability is key and successful capital introduction relies on bridging the gap between managers and investors, both in-person and virtually. We are excited to launch ’Bridge by BNP Paribas’ which will undoubtedly enhance our capital introduction team’s productivity, our clients’ experience and contribute to the growth of our prime services business.”

‘Bridge by BNP Paribas’ forms part of the bank’s efforts to strengthen its holistic equities offering. BNP Paribas completed the acquisition of 100% of Exane in July 2021, raising its stake from the 50% previously held during a successful 17-year partnership. Leveraging Exane’s expertise in cash equities (execution and research) and derivatives, the transaction further strengthens the range of equity and derivatives services BNP Paribas can offer to institutional investors and corporates globally. This, together with the completed migration of Deutsche Bank’s Global Prime Finance and Electronic Equities business to BNP Paribas in December 2021, positions the bank as a leading provider in Global Equities.

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Press Contacts:

BNP PARIBAS

Robert Madden

+1 (332) 323-3704

Robert.Madden@us.bnpparibas.com

Murray Parker

+44 781 851 0056

Murray.Parker@uk.bnpparibas.com

EDGEFOLIO

Jeremy Burnel

+447830 638 513

marketing@edgefolio.com

About Edgefolio

Edgefolio is the hedge fund industry’s leading fintech, providing customized solutions to some of the world’s largest financial institutions. Edgefolio provides custom digital enterprise solutions for investment banks and prime brokerages. Additionally, the company is the creator of FundPortal, a digital fund marketing and investor relations platform for fund managers worldwide, incorporating an investor portal, CRM, mail campaigns, data room and digital reporting. With a growing team around the world, Edgefolio is a global company with the clear goal of digitizing the fund industry, and through this, helping it become more sustainable.

About BNP Paribas

London Thursday 9 September 2021 – Exane BNP Paribas has maintained its position as number 1 research provider for Developed Europe for the 5^th year running in the 2021 European Institutional Investor (II) survey results for Research & Specialist Sales

This top performance confirms Exane BNP Paribas’ position as the leading platform in European equities.

Key highlights for Exane BNP Paribas from yesterday’s results:

#1 Developed Europe Research – the main headline category
#1 Industry Research – including 16 Number 1 rankings out of 30 sectors
#1 for Ranked Analysts – with 44 Top 3 or Runner-Up positions
Specialist Sales ranked Top 3 Positions in 24 categories (out of a possible 31)

Ben Spruntulis, head of cash equities at Exane BNP Paribas commented: “We are delighted that our clients have once again ranked Exane BNP Paribas as Europe’s top research provider for Developed Europe. It takes a huge team effort to succeed in such a competitive environment and it’s even more impressive to deliver so consistently, maintaining the top spot for five consecutive years. We’re proud to see the hard work and dedication of our exceptional people recognised in our industry’s definitive survey, and grateful to our clients for their continued support.”

Renaud-Franck Falce, head of capital markets in EMEA at BNP Paribas said: “We are proud of our Equity franchise that is known to our Corporate and Institutional clients for its outstanding performance once again this year. We are actively leveraging our partnership across Equities and Banking activities to deliver for our clients in an exceptionally busy period in Equity Capital Markets and will continue to strengthen such partnership thanks to the integration of Exane BNP Paribas.”

Nicolas Marque, global head of equity derivatives at BNP Paribas remarked:

“The result of this year’s Institutional Investor Developed Europe survey marks another key milestone following our acquisition of Exane earlier this year. Across Execution, Distribution & Advisory, we have a top platform and clear client recognition for our franchise. The Exane acquisition has a key role to play in building a great global equities business.”

Press Contacts

Emily Osborne

emily.osborne@uk.bnpparibas.com

+447469403814

BNP Paribas CIB on Twitter – @BNPParibasCIB

Notes to editors:

About BNP Paribas

BNP Paribas is a leading bank in Europe with an international reach. It operates in 68 countries and has more than 193,000 employees, including nearly 148,000 in Europe. The Group has key positions in its three main activities: Domestic Markets and International Financial Services (whose retail-banking networks and financial services are covered by Retail Banking & Services) and Corporate & Institutional Banking, which serves two client franchises: corporate clients and institutional investors. The Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, the Group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the European leader in consumer lending. BNP Paribas is rolling out its integrated retail-banking model in Mediterranean countries, in Turkey, in Eastern Europe and a large network in the western part of the United States. In its Corporate & Institutional Banking and International Financial Services activities, BNP Paribas also enjoys top positions in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.

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Since it’s launch in July 2019 the Aberdeen Standard Investments (ASI) and BNP Paribas’s Global Risk Mitigation (GRM) Index has delivered a strong two-year performance. The GRMx1 +100% MSCI World has gained 60% cumulative since launch (see table below).

The GRM index family provides institutional investors, such as pension funds and discretionary portfolio managers with an effective route to mitigate their equity risk and reduce portfolio volatility. Additionally, in a market where bonds offer a reduced prospect of a positive forward return and negative correlation to equities, investors with a long equity position can use Global Risk Mitigation as an alternative way to diversify their portfolios.

Since the launch in July 2019 and following investor demand, not only are standalone Global Risk Mitigation indices available, but also, investments combining Global Equities and Global Risk Mitigation. Summary of performance and expected betas below.

	Expected beta to MSCI World	Launch cumulative to 31st July ’21	YTD	Q1 2020
GRMx3	-60%	21.84%	-5.21%	51.88%
GRMx3 + 60% MSCI World	0%	61.84%	4.04%	37.92%
GRMx1 + 100% MSCI World	80%	60.03%	13.41%	-3.39%
MSCI World	100%	44.84%	15.07%	-21.05%

Source: Bloomberg

The GRM 1x Index, the composition of which is advised by ASI, aims to deliver a downside beta to equities of -0.2 or lower and generate a reasonable level of additional convexity in large equity market falls. This convexity means the Index should deliver stronger positive returns as the equity market decline increases. In addition, the Index has been designed to limit carry costs in rising/flat equity markets thereby making it easier for investors to retain the exposure in more benign environments. This investment objective is achieved by ASI dynamically allocating across four discrete building blocks namely; First Risk, Tail Risk, Trend and Defensive factors. Each of the four discrete blocks includes a number of underlying sub-indices published by BNP Paribas.

Various investment vehicles are available for investors to access the index including a daily dealing Irish domiciled fund.

Stephen Coltman, Senior Investment Manager of Alternative Investment Strategies at Aberdeen Standard Investments, comments: “The GRM strategy was designed to be an efficient risk management tool for portfolio managers combining the benefits of systematic implementation and execution with active portfolio oversight. Delivering the strategy through an index has allowed for multiple different access routes to the strategy and provided investors with the flexibility to incorporate GRM in to their portfolios according to their specific requirements.

Over the past two years we have managed the strategy through both a global pandemic driven bear market and a subsequent strong bull market in which developed market equity indices have reached new record highs. Throughout these different environments GRM has delivered consistent negative correlation to equities and added convexity to investor portfolios, with gains generated during market declines outweighing losses incurred during market rallies. At a time when reliable diversification is hard to find we continue to believe that GRM can offer an attractive alternative to investors looking to manage drawdown risk in their portfolios.”

Xavier Folleas, Global Head of QIS structuring at BNP Paribas commented: “We are delighted with the investment performance since launch in July 2019. The team at ASI have worked diligently to not only ensure the portfolio was well balanced to capture profits during the Q1 2020 equity sell off but also to retain much of the gains since then. Since live the GRMx3 beta neutral and GRMx1 + 100% Global Equities have both materially out performed a long only equity allocation (MSCI World) with lower volatility and lower drawdown helping deliver a more stable return.”

Media enquiries:

Andrea Ward

Aberdeen Standard Investments

07876 178696

andrea.ward@aberdeenstandard.com

–

Murray Parker

BNP Paribas

07818 510 056

murray.parker@uk.bnpparibas.com

Notes to editors

About Aberdeen Standard Investments

Aberdeen Standard Investments is a global asset manager dedicated to creating long-term value for our clients. With over 1,000 investment professionals, we manage £456.6 billion* of assets worldwide. We have clients in c.80 countries supported by over 40 offices globally. This ensures we are close to our clients and the markets in which we invest. (*as of 30 June 2021)
We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance.
You can access the Aberdeen Standard Investments media centre here: https://www.aberdeenstandard.com/news-and-media
In April 2021, we announced our intention to rebrand to The rebranding roll-out process for the new name and associated visual identity will begin in the summer and progress through 2021, alongside implementation of a full stakeholder engagement plan to manage the transition.

About BNP Paribas

The Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, the Group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the European leader in consumer lending.

BNP Paribas is rolling out its integrated retail-banking model in Mediterranean countries, in Turkey, in Eastern Europe and a large network in the western part of the United States. In its Corporate & Institutional Banking and International Financial Services activities, BNP Paribas also enjoys top positions in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.

Disclaimer

The methodology of and rules governing the index (the “Index Methodology” and the “Index”) are proprietary and may not be disclosed or disseminated without the permission of the sponsor of the Index (the “Index Sponsor”). None of the Index Sponsor, the index calculation agent (where such party is not also the Index Sponsor, the “Index Calculation Agent”) nor, where applicable, the index Investment Advisor (the “Index Investment Advisor”) guarantee that there will be no errors or omissions in computing or disseminating the Index.

The Index Methodology is based on certain assumptions, certain pricing models and calculation methods adopted by the Index Sponsor, the Index Calculation Agent and, where applicable, the Index Investment Advisor, and may have certain inherent limitations. Information prepared on the basis of different models, calculation methods or assumptions may yield different results. You have no authority to use or reproduce the Index Methodology in any way, and neither BNP Paribas nor any of its affiliates shall be liable for any loss whatsoever, whether arising directly or indirectly from the use of the Index or Index Methodology or otherwise in connection therewith.

The Index Sponsor reserves the right to amend or adjust the Index Methodology from time to time in accordance with the rules governing the Index and accepts no liability for any such amendment or adjustment. Neither the Index Sponsor nor the Index Calculation Agent are under any obligation to continue the calculation, publication or dissemination of the Index and accept no liability for any suspension or interruption in the calculation thereof which is made in accordance with the rules governing the Index. None of the Index Sponsor, the Index Calculation Agent nor, where applicable, the Index Investment Advisor accept any liability in connection with the publication or use of the level of the Index at any given time.

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Investment involves risk. The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not a guide to future results.

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The details contained here are for information purposes only and should not be considered as an offer, investment recommendation, or solicitation to deal in any investments or funds and does not constitute investment research, investment recommendation or investment advice in any jurisdiction.

Aberdeen Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1YG. Registered in Scotland No. 108419.

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London, 1 July 2021

Key facts

BNP Paribas signs 10 year agreement with FIS’ Cleared Derivatives suite as the backbone of its listed derivatives post-trade IT environment.
The FIS solution will provide BNP Paribas with a future-proof new technology platform, globally unified across more than 90 exchanges.

BNP Paribas, one of the world’s largest banks, is confirming its partnership in post-trade derivatives clearing technology with financial solutions leader FIS^® (NYSE: FIS).

The bank is working with FIS to transition to the new leading-edge technology of FIS’ Cleared Derivatives Suite. The FIS platform centralizes all main post-trade workflows onto a single, unified global system.

FIS’ Cleared Derivatives Suite will manage the full post-trade derivatives lifecycle for the bank including reconciliations and post-trade processing requirements. By securing an evolution to the new FIS platform, BNP Paribas expects to benefit from significant operational efficiencies, enhanced reactivity and reduced risk, ultimately delivering better service to its clients.

“The derivatives clearing industry is facing a perfect storm of challenges, stemming from increasing operational costs and regulatory changes, which is leading to pressure on margins. At the same time recent market volatility and high volumes periods have only accelerated the need for modernization,” said Nasser Khodri, President of Capital Markets, at FIS.

“Forward-looking organizations like BNP Paribas are transforming their post-trade derivatives processing operations with modern, flexible technology, and we are delighted that BNP Paribas has chosen to join the community of firms using our next generation Cleared Derivatives Suite to support its continued growth.”

“The 2020 volume peak further confirmed our strategy to invest for the long term in robust technological and operational capabilities”, said Gaspard Bonin, Deputy Head of Derivatives Execution & Clearing at BNP Paribas. “FIS has been a trusted and reliable partner for many years, and we are today excited to expand our partnership by taking advantage of the extended technological and functional capabilities of the FIS Cleared Derivatives Suite. This 10 year agreement is, for our clients and market partners, a clear testament of BNP Paribas’ long-term commitment to providing the best of service and to invest in new technology.”

About BNP Paribas

For More Information:

BNP Paribas contact

Murray Parker +44 (0) 7818 510056

Media Relations Manager

Murray.parker@uk.bnpparibas.com

PRESS RELEASE | 25 May 2021, London – Aviva Investors, the global asset management business of Aviva plc (‘Aviva’), has announced it has jointly completed an ESG-linked interest rate swap repack with BNP Paribas, and which has been provided to Associated British Ports (‘ABP’).

The 30-year transaction is believed to be the first SONIA-linked interest rate swap institutional repack and the first institutional repack transaction to have sustainability-linked key performance indicators (KPIs) attached to it. The performance targets were subject to second party verification by ISS Corporate Solutions, to ensure they were both sufficiently material and ambitious in nature, whilst also remaining aligned to Loan Market Association sustainability-linked loan principles[1].

As part of the deal, a discount is offered to ABP on its hedging rate, provided it meets certain ESG KPIs including a significant reduction in combined Scope 1 and Scope 2 emissions by 2030, building on the 36% reduction it has already achieved in absolute greenhouse gas emissions since 2014.

The agreement with ABP and BNP Paribas is the latest sustainability-linked financing Aviva Investors’ Real Assets business has invested in on behalf of Aviva UK Life, as it seeks to decarbonise its portfolio and transition to net zero by 2040. The transaction also highlights BNP Paribas’ commitment to innovating in sustainability-linked finance to support corporate and institutional clients in the shift to a net zero economy, and accelerate decarbonisation to meet the objectives of the Paris Agreement[2].

Munawer Shafi, Head of Structured and Private Debt at Aviva Investors, said: “We are delighted to have completed this innovative transaction with ABP and BNP Paribas. It demonstrates our ability to incorporate tailored sustainability considerations into bespoke transactions, without compromising on outcomes for borrowers or risk-adjusted returns for our clients. We hope this transaction will catalyse the adoption of ESG-linked transactions in the swap repack space”.

Matthew Ponsonby, Head of Global Banking, BNP Paribas UK explained: “Incentivising the net zero transition through finance can be a powerful mechanism to accelerate both the corporate and investor decarbonisation trajectory. This innovative transaction in a major sector like UK transportation highlights the value of sustainable finance extending into the derivatives market, whilst also demonstrating the need to support corporates such as ABP in holistically integrating transition targets into their financing needs”.

Marina Wyatt, Chief Financial Officer, Associated British Ports, said: “ABP recognises that it has an important role to play in helping the UK to reach net zero, and decarbonising our own operations is a vital part of this. We are proud to be partners for the first swap repack transaction with sustainability-linked key performance indicators, demonstrating our commitment to sustainability. We have reduced our absolute Greenhouse Gas Emissions by 36% since 2014, and this underlines our ambition to continuous improvement and even greater reductions in the future”.

ENDS

For more information contact:

James Morgan

Aviva Investors Media Relations | +44 (0)20 7809 6745| james.morgan@avivainvestors.com

Sarisher Mann

BNP Paribas UK Media Relations | +44 (0)7469 403 542 | Sarisher.mann@uk.bnpparibas.com

Madeleine Hallward

Group Head of Strategic Communications, Associated British Association

07850501903 | Email: madeleine.hallward@abports.co.uk

About ABP (www.abports.co.uk)

ABP is the UK’s leading ports group with 21 ports and other transport related businesses creating a unique national network capable of handling a vast array of cargo. The company contributes £7.5 billion to the UK economy every year and supports 119,000 jobs. Our current investment programme promises to increase further our contribution to regional economies around the UK. Our five-year investment programme across the group is worth £1 billion. Our investment is designed to respond to the needs of our customers whose business relies on our ports for access to international and, in some cases, domestic markets.

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £366 billion in assets as at 31 December 2020.

BNP Paribas

BNP Paribas is a leading bank in Europe with an international reach. It has a presence in 71 countries, with approximately 199,000 employees, of which more than 151,000 in Europe. The Group has key positions in its three main activities: Domestic Markets and International Financial Services (whose retail-banking networks and financial services are covered by Retail Banking & Services) and Corporate & Institutional Banking, which serves two client franchises: corporate clients and institutional investors. The Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance.

[1] https://www.lma.eu.com/documents-guidelines/documents/category/green–sustainable-finance#sustainability-linked-loan-principles140

[2] https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

London, 7 April 2021 – THEAM Quant Europe Climate Carbon Offset Plan has enhanced its investment process with an additional focus on the outlook for companies’ profitability, prospects and valuation. The fund, created in partnership with BNP Paribas Global Markets and managed by BNP Paribas Asset Management (‘BNPP AM’), aims to generate returns from exposure to listed companies with robust Environmental, Social and Governance (‘ESG’) standards focusing on those with the strongest energy transition scores[1] The enhanced methodology, which coincides with the fund’s two-year anniversary, is based on a more selective approach to three aspects of companies’ financial outlook:

Profitability – assessing a company’s resources required to run its operations and assessing return on invested capital to determine if it is sufficiently meeting profit expectations.
Prospects – analysis of a company’s momentum, return, volatility and balance of upward and downward earnings revisions.
Valuation – earnings yield and growth creating ‘value for money’

Each company receives a score of 1-10 (10 being the highest) based on its decile ranking according to these financial metrics. The top two thirds of companies in each sector then become eligible. This financial selectivity complements the existing strong extra-financial objectives of the systematic investment strategy, designed to capture the performance of European liquid equities with high ESG standards and robust energy transition strategies. The stock portfolio is also structured such that its carbon footprint is reduced by at least 50% compared to the broad European equity universe, while keeping a similar risk/return profile. The fund then aims to offset the remaining carbon footprint (Scope 1 and Scope 2 emissions) generated by this portfolio through the use of Verified Emission Reductions certificates (‘VERs’), also known as carbon credits, linked to the Kasigau REDD+ Project of Wildlife Works. This offsetting of carbon footprint can be considered as partial. (See Notes to Editors).

Vincent Berard, Head of THEAM Quant solutions for the BNP Paribas Global Markets Quantitative Investment Strategy team, said:

“We are very pleased to have seen a strong interest in the Europe Climate Carbon Offset Plan over the last two years, having recently strengthened its investment approach, with an added focus on companies’ financial outlook. It is delivering on its financial and extra-financial objectives, and at the same time is contributing towards a positive societal environmental, social and educational impact in Kenya.”

Francois Carré, Carbon Portfolio Manager for BNP Paribas, and a member of the Taskforce on Scaling Voluntary Carbon Markets, commented:

“It is clear that the voluntary carbon market is critical to achieving net-zero carbon emissions by 2050, and the Taskforce on Scaling the Voluntary Carbon Markets is helping the market reach its full potential. Our investment approach is very much in the spirit of the Taskforce’s latest recommendations i.e. Reduce, Report then Offset. Our investors are offered the opportunity to support projects which protect vital natural ecosystems, support local communities, and help prevent catastrophic climate change.”

– ENDS –

Press Contacts:

BNP Paribas

Murray Parker +44 (0) 7818 510 056 murray.parker@uk.bnpparibas.com

Notes to Editors:

THEAM Quant Europe Climate Carbon Offset Plan is a Fonds Commun de Placement (‘FCP’), UCITS V compliant, registered under the French law. There is also a global version of the fund called the THEAM Quant World Climate Carbon Offset Plan.

The investments in the fund are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the fund described being in risk of capital loss. For a complete description and definition of risks, please consult the last available prospectus and KIID of the fund that can be downloaded free of charge from our website: www.bnpparibas-am.com.

About BNP Paribas Asset Management

BNP Paribas Asset Management is the asset management arm of BNP Paribas, one of the world’s foremost financial institutions, and offers high value-added solutions to individual savers, companies, and institutional investors. It has a broad range of skills in four investment divisions: Equities, Fixed Income, Private Debt & Real Assets, and Multi-Asset, Quantitative and Solutions (MAQS). Sustainability is at the heart of BNP Paribas Asset Management’s strategy and investment decision-making process, making an active contribution to energy transition, environmental protection and the promotion of equality and inclusive growth. Its aim is to achieve long-term sustainable investment returns for its clients. BNP Paribas Asset Management has assets under management of EUR 483 billion* (as at 31 December 2020), with more than 500 investment professionals and almost 500 client servicing specialists, serving individual, corporate and institutional clients in 72 countries.

* EUR 618 billion of assets under management and advisory as at 31 December 2020

For more information please visit bnpparibas-am.com

About BNP Paribas

About the Wildlife Works Kasigau Corridor REDD+ project

The Wildlife Works Kasigau Corridor REDD+ project protects over 200,000 hectares of highly threatened dryland forest, which is owned by 4,500 community members and is home to 116,000 people. The project establishes a safe haven for over 50 species of large mammals, 300 species of birds, and populations of IUCN Red List species such as cheetahs, lions and over 2,000 African elephants that cross from Tsavo East to Tsavo West National Parks. In 2011, the Kasigau Corridor project became the world’s first REDD+ project to be verified under the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity Standard (CCB). The project was also awarded Gold Level status by the CCB for exceptional biodiversity and climate benefits. The project will generate 45 million tons of Verified Emission Reductions (VERs) over 30 years. More information is available here: https://www.wildlifeworks.com/kenya. Wildlife Works REDD+ Project in Kenya: Vital Climate, Community and Biodiversity – Theam Quant (bnpparibas-am.com)

About REDD+

REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is a climate change mitigation strategy envisioned by the United Nations. REDD+ places a value on a standing forest as a key element in a plan to avoid continued deforestation. By making forests more valuable standing than cut down, REDD+ provides forest communities and countries with a model for economic development where both people and the planet can benefit. The value is represented by Verified Emission Reduction (VER) units. VERs are also known as offsets or carbon credits. Each VER equals one tonne of carbon dioxide that was prevented from being released into the atmosphere as a result of a REDD+ project’s conservation plan.

About the GHG Protocol

The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard classifies a company’s GHG emissions into three ‘scopes’. Scope 1 emissions are direct emissions by the company. Scope 2 emissions are indirect emissions from the consumption of purchased energy. Scope 3 emissions (value chain emissions) are other indirect emissions not within the company’s control. More information is available here: https://ghgprotocol.org/.

Additional information

BNP Paribas Asset Management France is an investment management company authorised by the Autorité des Marchés Financiers, no. GP96002, incorporated as a simplified joint stock company, registered at 1, Boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832. Its website is www.bnpparibas-am.com.

This material is issued and has been prepared by BNP PARIBAS ASSET MANAGEMENT UK Limited, authorised and regulated by the Financial Conduct Authority. Registered in England No: 02474627, registered office: 5 Aldermanbury Square, London, England, EC2V 7BP, United Kingdom. It contains opinions and statistical data that are considered lawful and correct on the day of their publication according to the economic and financial environment at the time. This document is produced for information purposes only and does not constitute investment advice or form part of an offer or invitation to subscribe for or to purchase any financial instrument(s) nor shall it or any part of it form the basis of any contract or commitment whatsoever.

This document is provided without knowledge of an investors’ situation. Prior to any subscription, investors should verify in which countries the financial instruments referred to in this document refers are registered and authorised for public sale. In particular financial instruments cannot be offered or sold publicly in the United States. Investors considering subscriptions should read carefully the most recent prospectus and Key Investor Information Document (KIID) agreed by the regulatory authority, available on the website. Investors are invited to consult the most recent financial reports, which are also available on the website. Investors should consult their own legal and tax advisors prior to investing. Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its investment objectives. Their value can decrease as well as increase. In particular, changes in currency exchange rates may affect the value of an investment. Performance that is shown net of management fees and is calculated using global returns with time factored in, with net dividends and reinvested interest, and does not include subscription-redemption fees, exchange rate fees or tax. Any gross of fees performance included in this material do not reflect the deduction of commission, fees and other expenses incurred. Returns will be reduced after the deduction of such fees. Past performance is not a guarantee of future results.

This document is directed only at person(s) who have professional experience in matters relating to investments (“relevant persons”). Any investment or investment activity to which this document relates is available only to and will be engaged in only with Professional Clients as defined in the rules of the Financial Conduct Authority. Any person who is not a relevant person should not act or rely on this document or any of its contents.

All information referred to in the present document is available on www.bnpparibas-am.com.

As at April 2021.

[1] Energy transition scores are provided by Vigeo Eiris.