January 18, 2019 / News

Government pension opts for smart sustainability fund

By Joe McGrath, ESG Clarity

The North West-based local government pension fund has more than £9 billion in assets

Government pension opts for smart sustainability fund

Merseyside Pension Fund has invested £400 million into a smart sustainability fund, managed by State Street Global Advisors.

The All World Equity Climate Balanced Multi-Factor Index Fund will track the FTSE All World Climate Balanced Comprehensive Factor Index and will aim to use factor exposures and climate change considerations to generate returns.

The Merseyside Pension Fund is the UK’s fifth largest with some £9 billion in assets under management.

“Working in collaboration with FTSE Russell and State Street Global Advisors, the new fund provides us with an investable, risk-efficient means of achieving our decarbonisation goals,” said Owen Thorne, an investment manager at the Merseyside Pension Fund.

The pension fund’s climate strategy aims to align its investment policy with the goals of the 2015 Paris Agreement and has allocations that capture the risks and opportunities from climate change.

“The initial seeding successfully completed this month and the creation of this fund reflects the growing trend from asset owners to further integrate sustainable and ESG factors into their portfolios which we are thrilled to be managing,” explained Ana Harris, head of Equity Portfolio Strategies at State Street Global Advisors.

Aled Jones, head of Sustainable Investing, Europe, at FTSE Russell added that the Merseyside Pension Fund’s climate risk strategy was an “ambitious” one.

He said: “UK pension funds increasingly recognise the risks and opportunities arising from climate change and are implementing investment strategies to manage their exposure appropriately.

“The FTSE All-World Climate Balanced Comprehensive Factor Index provides a transparent means of integrating climate considerations into a passive equity portfolio and also aligns well with investor stewardship objectives.”