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This website is published by Lyxor International Asset Management (LIAM), a French asset management company approved by the French Financial Markets Authority (Autorité des Marchés Financiers, 17 place de la Bourse, 75082 Paris Cedex 02) under the UCITS (2009/65/EC) and AIFM (2011/31/EU) directives.

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This website is subject to French and Finnish law.


A professional client for the purposes of the MiFID (2004/39/EC) and the AIFMD (2011/31/EU) as implemented in Finland is one of the following:

-         an entity required to be authorised or regulated to operate in the financial markets. The following list includes all authorised entities carrying out the characteristic activities of the entities mentioned, whether authorised by an EEA State or a third country and whether or not authorised by reference to a directive:

·            an investment firm, a credit institution, a fund management company, an alternative investment fund manager, a depositary;

·            a stock exchange, an options exchange, a clearing entity;

·            a central securities depository;

·            an insurance company, a pension insurance company, a pension fund;

·            an entity that deals exclusively on own account in financial derivatives for the sole purpose of hedging positions on derivatives markets or deals for the account of other members of those markets or makes prices for them and is guaranteed by clearing members of the same markets;

·            a business entity dealing in commodities and/or commodity derivatives on own account;

·            any other institutional investor;



-          a large undertaking, meeting two of the following size requirements according to the financial statements of the last preceding financial period:


·            balance sheet total of at least EUR 20,000,000

·            net turnover of at least EUR 40,000,000

·            own funds of at least EUR 2,000,000


-         the State of Finland, the State Treasury, the province of Åland, foreign national and regional governments as well as foreign public bodies managing public debt;

-         the European Central Bank, the Bank of Finland and similar foreign central banks as well as the International Monetary Fund, the World Bank and similar international associations and organisations;

-         institutional investors that, as their main field of activity, invest in financial instruments;

-         other clients that have in writing requested to be treated as a professional client and, after having received written information on the limited protection afforded to professional clients confirmed in writing their understanding of the same, provided that the investment firm has assessed that the client is capable of making independent investment decisions and understands the related risks and, furthermore, that the client meets at least two of the following criteria:

·            the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

·            the size of the client’s financial instrument portfolio exceeds EUR 500,000;

·            the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.


A professional investor for the purposes of the UCITS (2009/65/EC) as implemented in Finland is one of the following:

-         an entity required to be authorised or regulated to operate in the financial markets, as defined above under ‘professional client’;

-         a large undertaking, meeting the requirements set out above for professional clients

-         the State of Finland, the State Treasury, the province of Åland, foreign national and regional governments as well as foreign public bodies managing public debt;

-         the European Central Bank, the Bank of Finland and similar foreign central banks as well as the International Monetary Fund, the World Bank and similar international associations and organisations;

-         institutional investors that, as their main field of activity, invest in financial instruments;

-         other investors that have notified the fund management company, UCITS or its representative in writing that they, on the basis of their expertise and experience in investing activities, are professional investors, and meet at least two of the following criteria:

·            the investor has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

·            the size of the investor’s financial instrument portfolio exceeds EUR 500,000;

·            the investor works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.


The above definitions are only extracts and are as such not exhaustive. For further details please refer to the Finnish Investment Services Act (747/2012) and the Finnish Investment Funds Act (48/1999).


Marketing Restrictions and Implications


Lyxor UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on this website are open ended mutual investment funds (i) established under French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, if not all, of the protections provided by the Finnish regulatory system generally and for funds authorised in Finland do not apply to these exchange traded funds (ETFs). In particular, investors should note that holdings in this product will not be covered by the provisions of the Financial Services Compensation Scheme or by the Finnish Investors’ Compensation Fund.


This website is exclusively intended for persons who are not "US persons", as such term is defined in Regulation S or the US Securities Act 1933, as amended, and who are not physically present in the US. This website does not constitute an offer or an invitation to purchase any securities in the United States or in any other jurisdiction in which such offer or invitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Potential users of this website are requested to inform themselves about and to observe any such restrictions.


Index Replication Process


Lyxor UCITS ETFs follow both physical and synthetic index replication process.


However, most Lyxor UCITS ETFs follow synthetic replication process. This consists of entering into a derivative transaction (a ‘Performance Swap’, as defined below) with a counterparty that provides complete and effective exposure to its benchmark index. Lyxor has adopted this methodology in order to minimise tracking error, optimise transaction costs and reduce operational risks.


A Performance Swap is a contractual agreement which is negotiated over-the-counter (OTC) between two parties: the Lyxor UCITS ETF and its counterparty. From a risk perspective, each Performance Swap ranks equally with other senior unsecured obligations of the counterparty, such as common bonds (i.e., same rights to payments). In the Performance Swap, the counterparty of the Lyxor UCITS ETF commits to pay the Lyxor UCITS ETF a variable return based on a pre-determined benchmark index, instead of a fixed stream of income (as in bonds). At the same time, the counterparty will receive from the Lyxor UCITS ETF the performance and any related revenues generated by the basket's assets (excluding the value of the Performance Swap) held by the Lyxor UCITS ETF. Information provided on individual ETFs includes data on the basket relating to the ETF and the percentage value of the basket represented by each asset. The information is relevant to the closing values on the date given. 


Investment Risks


The Lyxor UCITS ETFs described on this website are not suitable for everyone. Investors' capital is at risk. Investors should not deal in this product unless they understand, having obtained independent professional advice where necessary, its nature, terms and conditions, and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates. If a fund is quoted in a different currency to the index, currency risks exist.


Prior to any investment in any Lyxor UCITS ETF, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. We recommend that you consult your own independent professional advisors (including legal, tax, financial or accounting advisors, as appropriate).


Specific Risks


·         Capital at Risk. ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Benchmark Index. Investors’ capital is fully at risk and investors may not get back the amount originally invested. Investments are not covered by the provisions of the Financial Services Compensation Scheme (“FSCS”), the Finnish Investors’ Compensation Fund or any similar scheme.

·         Counterparty Risk. Investors may be exposed to risks resulting from the use of an OTC Swap with Societe Generale. Physical ETFs may have Counterparty Risk resulting from the use of a Securities Lending Programme.

·         Currency Risk. ETFs may be exposed to currency risk if the ETF or Benchmark Index holdings are denominated in a currency different to that of the Benchmark Index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.

·         Replication Risk. ETFs are designed to replicate the performance of the Benchmark Index. Unexpected events relating to the constituents of the Benchmark Index may impact the Index provider’s ability to calculate the Benchmark Index, which may affect the ETF’s ability to replicate the Benchmark Index efficiently. This may create Tracking Error in the ETF.

·         Underlying Risk. The Benchmark Index of a Lyxor ETF may be complex and volatile. When investing in commodities, the Benchmark Index is calculated with reference to commodity futures contracts which can expose investors to risks related to the cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.

·         Liquidity Risk. On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the Benchmark Index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, Societe Generale or other Market Maker systems; or an abnormal trading situation or event. 


The securities can be neither offered in nor transferred to the United States.




Any statement in relation to tax, where made, is generic and non-exhaustive and is based on our understanding of the laws and practice in force as of the date of this document and is subject to any changes in law and practice and the interpretation and application thereof, which changes could be made with retroactive effect. Any such statement must not be construed as tax advice and must not be relied upon. The tax treatment of investments will, inter alia, depend on an individual’s circumstances. Investors must consult with an appropriate professional tax adviser to ascertain for themselves the taxation consequences of acquiring, holding and/or disposing of any investments mentioned on this website. 

Further information on the risk factors are available in the [Risk Warning – link to risk page] section of the website.


Any fund prospectus and supplements are available at Information given about the past performance of the funds is no guarantee of future performance. No investment decision should be taken without reading the fund prospectus and any fund supplement of the fund concerned.


Although the content of the website is based upon information that LIAM consider reliable or comes from sources that LIAM consider reliable, LIAM have not verified such information. Lyxor makes no representation or warranty as to the accuracy, completeness or adequacy of any information.  Any reproduction, disclosure or dissemination of the materials available on the website is prohibited.



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By clicking on your client type to enter the website, you confirm that you qualify as a ‘professional client’ or ‘professional investor’, as set out above and shall be deemed to have represented to us that you are not a U.S. person and that you are not located in the United States of America, its territories and possessions, and any State of the United States of America and that you are otherwise authorised to receive the information to and on this website.




13 Jan 2020

5 reasons to go passive for Green Bonds

global green

Despite a record-breaking year of inflows into ESG ETFs in 2019 – and a record year for new green bond issuance – the trend towards sustainable investing is only likely to accelerate. In this blog, François Millet, Head of Strategy, ESG & Innovation, gives five reasons why investors should consider taking a passive route to green bond investing. 

The ongoing climate emergency wreaked havoc in 2019. Cyclone Idai claimed thousands of lives across south-eastern Africa. France recorded its highest ever temperature of 45.9°C, while Venice saw its streets and squares ravaged by floods.1

Meanwhile, the devastating bush fires in Australia rage on, with 70-metre-high flames reported (that’s higher than the Sydney Opera House). So far, the fires have claimed 14.8 million acres of bush, forest and parks.2 To put that into perspective, that’s twice the surface area of Belgium.

While some may have simply been unfortunate “Acts of God”, the growing frequency and intensity of such events may well be the by-product of climate change.

It’s a sobering picture, but we’re encouraged by the real shift in mindset we saw in 2019. Extinction Rebellion protests, Beyond Meat’s IPO, the so-called ‘Greta effect’ – momentum is building and, as last year’s inflows demonstrated, investors have shown they care too.

This is great news, because finance has the power to change the world. Green bonds in particular could help fuel the transition to a low-carbon future, given their proceeds are earmarked solely for the financing of eco-friendly projects and assets.

At Lyxor, we believe the best way of investing in green bonds is to choose a passive fund. Here’s why. 

1. Setting standards

A common challenge for ESG (Environmental, Social and Governance) investors is wrapping their heads around the lack of standardisation. While frameworks do exist, reaching consensus on what makes a company “good” or “bad” is easier said than done. This often boils down to personal values, priorities and preferences.

But in the world of green bonds, definitions of what makes a bond truly ‘green’ are much easier to come by. The green bond market is arguably the most standardised area of ESG investing, especially compared to ratings-based ESG funds, or thematic funds with heterogeneous criteria.

Green bonds are issued with reference to an issuance framework, generally the Green Bond Principles (GBPs) of the International Capital Market Association (ICMA). Some may use other frameworks, but these are generally issued by supranationals or sovereigns following guidelines close to those of the GBPs anyway. Most of these self-labelled green bonds then receive second-party opinions by qualified agencies and auditors. The Climate Bonds Initiative (CBI), an investor-focused not-for-profit organisation dedicated to the mobilisation of fixed income markets for climate change solutions, can also certify green bonds.

While the ICMA largely comprises issuers, banks, securities dealers and brokers with a largely issuer-focused perspective, the CBI offers more to investors. Not only is it fully aligned with the GBPs, it also goes a step further by assessing issuers based on their use of proceeds, reporting standards and adherence to a strict taxonomy. In fact, the CEO of the CBI is one of the members of the European Commission’s Technical Expert Group (TEG) on sustainable finance. The CBI’s taxonomy is thus taken very seriously.

2. Building consensus 

The CBI’s role in defining a robust taxonomy and standards for green bonds is based on feedback from working groups comprising investors, scientists, supranationals, NGOs and banks. As a result of these ongoing dialogues, the CBI helps keep the market informed and ensures it evolves along a healthy pathway to a greener world.

In fact, in December 2019, the CBI launched its third version of the international Climate Bonds Standard which is designed to ensure compatibility with the new EU Green Bond Standard (GBS) and the latest version of the Green Bond Principles (GBPs) by strengthening green definitions and disclosure requirements.

The findings of the CBI contain valuable insight for green bond issuers. For example, in a recent survey conducted by the CBI and co-sponsored by Lyxor, European investors expressed a high interest in corporate issuers from the Energy, Utilities and Industrials sectors. Like it or not, major emitters and polluters from these sectors have a critical role to play in achieving the European Climate Foundation’s target of net zero greenhouse gas emissions by 2050. Urgently engaging with these companies to consider more green bond issuances will be critical. Shunning them isn’t the answer, but investing in their bonds could be.

So whatever the nature of the issuer, investors can invest in their green bonds with a clear conscience, knowing that their proceeds will only be used to fund pro-climate projects and assets. The CBI’s consensus-backed standardisation and its strict taxonomy help pave the way for passive investments, and address the risk of ‘greenwashing’, where investments are made to seem more climate-friendly than they are. At Lyxor, only green bonds approved by the CBI are eligible for inclusion in the underlying indices of our green bond ETF range.

3. Increasing transparency

All investors want transparency on where their money is going, even more so when it comes to sensitive ESG investments such as green bonds. As with all passive ETFs, fund holdings are disclosed daily and are readily available – you can easily find them online on Lyxor’s product pages.

Furthermore, holders of our green bond ETFs can see the use-of-proceeds in action. The chart below shows the UoP (Use-of-Proceeds) category breakdown of the Solactive Green Bond EUR USD IG index underlying our ETF launched in 2017.3

global green

But we don’t stop there. Knowing which kind of categories your money is financing is useful, but not enough to truly quantify the impact of your investment. That’s why we provide monthly reports on our website with detailed information on our funds’ climate and ESG metrics.

We also provide more tangible figures, such as new installed renewable energy generation capacity (in MWh) and emissions avoided (in tons of CO2). In more relatable terms, we estimate that the impact of our first green bond ETF over a one-year period equates to the average energy use of over 5,000 homes, or the equivalent in avoided emissions of close to 12,000 passenger vehicles driven for a year.4

Estimated impact of the Lyxor Green Bond (DR) UCITS ETF over a 1 year period4

global green

 4. Lowering costs

As we’ve mentioned before, improvements in the collection, cleansing and standardisation of ESG data mean that index providers can codify ESG objectives into benchmarks with a great degree of precision, rigour and transparency.

Managers of active green bond funds must charge higher fees to cover their research costs and analyst salaries. In contrast, the rules-based nature of index tracking ETFs helps keep costs for investors down. In the case of our green bond ETF range, our chosen index (built with Solactive) selects securities based on an initial starting universe of green bonds independently approved by the CBI.

In other words, our investors still benefit from the research and expertise of the CBI, a leading authority on the green bond market with over 60 employees, without incurring the higher fees they would from an active manager. 

5. Diversifying exposures

Another benefit of taking a passive approach to green bond investing is diversification. In the case of our ETF range, this is true on many levels. Firstly, our exposures are global, covering issuers from developed economies like France, Germany, and the US, but also emerging markets like China, India and Brazil.5

Secondly, the underlying indices in our range select green bonds from a variety of issuer types, including sovereigns (e.g. Belgium), sub-sovereigns (e.g. City of Paris), supranationals (e.g. European Investment Bank), development banks (e.g. Asian Development Bank) and corporates across sectors (e.g. Apple, Bank of America, Iberdrola).5  

global green

Source: Lyxor International Asset Management, Bloomberg. Data as at 30/08/2019.

Finally, as with similar global aggregate exposures, our funds diversify across maturity buckets, meaning duration levels are comparable to traditional benchmarks.

It’s worth noting that active green bond managers may claim to offer better risk-adjusted returns through fundamental analysis and proprietary ESG frameworks. However, our research shows that some active green bond funds are not averse to ‘closet tracking’, where a fund ultimately behaves just like its reference benchmark. Why pay for an index hugger when you can get the real thing for a fraction of the cost?

Put your money where your conscience is


If the climate emergency is an issue as close to your heart as it is ours, consider our innovative green bond ETF range to make a tangible, targeted impact. Our fund launched in 2017 and was the first of its kind in the world. Since then, it’s been awarded the prestigious Greenfin label, a national certification for private investments in a green economy introduced by the French government following the COP21. The label solidifies its credibility as a fund committed to financing the green economy, as it demonstrates a high level of requirement for the ‘green’ quality of its underlying assets.

1Source: The Guardian, 19 Dec 2019:
2Source: BBN News, 3 Jan 2020:
3Source: Lyxor International Asset Management, Climate Bonds Initiative. Data as at 26/08/2019. Some green bonds in the index have Use of Proceeds overlapping across multiple categories.
4Source: Lyxor International Asset Management, 1st December 2019. These indicators account for 43% of the portfolio weight, where data was available. AUM of fund at time of calculation was €160m. Further explanations on methodology and assumptions available on request.
5Source: Lyxor International Asset Management, Solactive, as at 06/01/2020.

Risk Warning

This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2014/65/EU. These products comply with the UCITS Directive (2009/65/EC). Société Générale and Lyxor International Asset Management (LIAM) recommend that investors read carefully the “investment risks” section of the product’s documentation (prospectus and KIID). The prospectus and KIID are available free of charge on, and upon request to

Except for the United-Kingdom, where this communication is issued in the UK by Lyxor Asset Management UK LLP, which is authorized and regulated by the Financial Conduct Authority in the UK under Registration Number 435658, this communication is issued by Lyxor International Asset Management (LIAM), a French management company authorized by the Autorité des marchés financiers and placed under the regulations of the UCITS (2014/91/EU) and AIFM (2011/61/EU) Directives. Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudentiel et de résolution (the French Prudential Control Authority).

The products mentioned are the object of market-making contracts, the purpose of which is to ensure the liquidity of the products on the London Stock Exchange, assuming normal market conditions and normally functioning computer systems. Units of a specific UCITS ETF managed by an asset manager and purchased on the secondary market cannot usually be sold directly back to the asset manager itself. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them. Updated composition of the product’s investment portfolio is available on In addition, the indicative net asset value is published on the Reuters and Bloomberg pages of the product, and might also be mentioned on the websites of the stock exchanges where the product is listed.

Prior to investing in the product, investors should seek independent financial, tax, accounting and legal advice. It is each investor’s responsibility to ascertain that it is authorised to subscribe, or invest into this product. This document is of a commercial nature and not of a regulatory nature. This material is of a commercial nature and not a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor Asset Management (together with its affiliates, Lyxor AM) or any of their respective subsidiaries to purchase or sell the product referred to herein.

Research disclaimer

Lyxor International Asset Management (“LIAM”) or its employees may have or maintain business relationships with companies covered in its research reports. As a result, investors should be aware that LIAM and its employees may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see appendix at the end of this report for the analyst(s) certification(s), important disclosures and disclaimers. Alternatively, visit our global research disclosure website

Conflicts of interest 

This research contains the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to (i) ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees.

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