GMO preps resource transition fund

The fund would invest in companies involved in natural resources other than fossil fuels

Grantham, Mayo, Van Otterloo (GMO) is preparing to add a fund to its lineup that anticipates more demand for clean energy.

The firm filed an initial prospectus for its GMO Resource Transition Fund in late November with the Securities and Exchange Commission. The fund, like other GMO strategies, is not labeled specifically as an ESG product but does allow ESG considerations at the management team’s discretion.

“Given global population growth, the industrialization of emerging countries and the clean energy transition, GMO believes that global demand for many natural resources will increase and, given the finite supply of natural resources, that prices of these natural resources will increase over a long time period,” the prospectus notes.

The “resource transition sector” in which the fund plans to invest includes businesses involved in natural resources other than fossil fuels. That includes mining, metals, energy technology, forest products, building materials, water and other areas, according to the company’s filing.

The forthcoming fund has net fees ranging from 86 basis points to 105 bps, depending on share class.

Portfolio managers are Lucas White and Thomas Hancock from GMO’s focused equity team.

Currently, the firm has one US mutual fund that seeks to invest specifically with climate change in mind – the GMO Climate Change Fund – which launched in 2017 and has just under $1bn in net assets.

GMO became a member of the Net Zero Asset Managers initiative more than a year ago and recently made its initial target disclosure.

The firm’s cofounder Jeremy Grantham has been vocal on environmental issues and in 1997 with his wife, Hannelore, started the Grantham Foundation for the Protection of the Environment.

Earlier this year, the company hired a new head of ESG and sustainability, Deborah Ng, who is tasked with accelerating the Boston-based firm’s initiatives in those areas.