Comgest has launched an emerging markets product that will have a zero-tolerance approach to companies that are exposed to fossil fuel extraction, reserves and power generation
The Growth Emerging Markets Plus Fund has been seeded $250m by a quartet of investors including the National Trust, the Joseph Rowntree Foundation, Guardian Media Group and the NESTA Trust and is now open to external investors.
It will be based on Comgest’s existing $5.2bn Growth Emerging Markets strategy, which has no or low direct fossil fuel exposure but with stricter exclusions regarding fossil fuel exposure including companies involved in areas such as nuclear energy or uranium mining, (in which the flagship fund also has no current investments).
The fund will adhere to the requirements of several European ESG/ SRI labels, including Germany’s FNG and Belgium’s Towards Sustainability (Febelfin).
It will be run by the group’s GEM managers and ESG specialists including Juliette Alves (pictured), Nicholas Morse, Yann Gérain and Eric Voravong, who will construct a concentrated portfolio of high quality long-term growth companies, while also seeking to engage businesses on ESG issues.
Portfolio manager Alves said: “Comgest’s philosophy as a long-term steward of our clients’ assets is to fully integrate ESG considerations into our investment decision making process. However, we understand that some investors now require portfolios with strict ethical exclusions, such as fossil fuel-free. Given the high overlap in holdings, we expect the new fund will deliver similar performance characteristics to our flagship product.”
Over the three years to 2 March, the Comgest Growth Emerging Markets Fund has returned 4.9% compared to the MSCI Emerging Markets return of 13.5% and the Investment Association’s Global Emerging Markets sector gain of 11.13%, according to FE.
Scott Spencer, investment manager within the multi-manager soutions team at BMO Global Asset Management, commented: “A lot of ESG funds have done well (performance-wise) due to their bias towards quality growth names. Despite the increase in new launches into the space there are not that many which would be classed as value funds.”