This is a rolling stream of all the latest responsible investment products coming to the European market and news on rebranded strategies to incorporate a sustainable focus
BlackRock launches two climate strategies
13 January 2022
BlackRock has launched a pair of climate funds providing investors with access to climate themes expected to enable and/or benefit from the transition to a lower greenhouse gas emissions economy and to net zero carbon emissions.
The group said the BGF Climate Action Multi-Asset Fund is a multi-asset strategy investing in issuers striving to lower their greenhouse gas emissions across a diversified portfolio which includes equities, fixed income and alternative assets in areas such as clean power, resource efficiency, sustainable nutrition, biodiversity and clean transport.
Rupert Harrison, portfolio manager for multi-asset Strategies at BlackRock, said: “Investors are increasingly looking to align their climate priorities with their investment goals – a balance that can prove highly complex and potentially create challenges on many levels. In aiming to address this, a multi-asset approach can tap into a wide array of -related strategies to seek out the most attractive investment opportunities – and manage the risks – presented by climate change. By doing so, it aims to provide a smoother investment journey through diversification and careful risk management.”
Meanwhile, the BGF Climate Action Equity Fund will invest in disruptive structural winners driving the reduction of greenhouse gas emissions across the market cap spectrum. These include companies that provide solutions for the mitigation of, and/or adaptation to, climate change, or businesses whose propositions are in the process of becoming more resilient to the long-term risks presented by climate change and resource depletion.
Its manager Tom Holl explained: “The fund targets greenhouse gas emissions at source by investing globally in the sectors that are mitigating the most significant causes of CO2 emissions – such as power generation, transportation fuels, agriculture and industrial processes and waste. As the move towards a greener future picks-up pace, we are seeing many companies capable of enabling, as well as benefiting from, the transition to a lower greenhouse gas emissions economy.”
PGIM expands debt fund range
13 January 2022
PGIM has added a emerging market ESG debt fund to its range.
Managed by PGIM Fixed Income’s senior portfolio managers Cathy Hepworth and Mariusz Banasiak, the PGIM Emerging Market Hard Currency Debt ESG Fund is a replica of the group’s Emerging Market Hard Currency Debt strategy, but with the addition of an integrated ESG framework.
The diversified portfolio will consist of hard currency opportunities – across sovereign, quasi-sovereign and corporate bonds. It is classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR), alongside the other seven ESG UCITS funds offered by PGIM to non-US investors.
Kimberly LaPointe, head of PGIM Investments International, commented: “The ongoing strengthening of our range of ESG-integrated solutions is a key priority for PGIM, particularly as we continue to see accelerating interest in sustainable investment solutions from clients across the globe. We are extremely pleased to unveil the PGIM Emerging Market Hard Currency Debt ESG Fund, which is exposed to many of the world’s fastest growing economies and offers compelling diversification prospects for client fixed income portfolios.”
Newton unveils ESG version of global EM fund
11 January 2022
Newton Investment Management, part of BNY Mellon Investment Management, has launched a sustainable version of its global emerging markets fund.
Sustainable Global Emerging Markets is managed by Paul Birchenough and Ian Smith and will look to hold 45-65 sustainable emerging market securities.
The £200m strategy is benchmarked against the MSCI Emerging Markets NDR Index and looks to align itself with Sustainable Development Goals in the earth, health and wealth brackets.
Fidelity rebrands global fund to focus on sustainable companies
10 January 2022
Fidelity International has rebranded its Fidelity Global Focus Fund to have a sustainable focus.
The Fidelity Sustainable Global Equity Fund will launch on 24 January 2022 and will invest at least 70% of the portfolio in companies with a minimum ESG rating of BBB by MSCI and 50% in ESG leaders rated AA or above.
It will sit in the firm’s Sustainable Family range and contain 40-60 ESG growth companies.
Nordea extends access to two ESG bond funds
10 January 2022
Nordea Asset Management has added two bond funds to its ESG STARS range, making them available to a wider client base.
Nordea 1 – US Corporate Stars Bond Fund and Nordea 1 – North American High Yield Stars Bond Fund were launched in 2019 for the firm’s Nordic clients and are now available across Europe. There are now 19 funds in the ESG STARS range.
“The two US fixed income solutions complement our ESG STARS line-up in order to offer our clients a broad selection of ESG solutions that enable them to build diverse portfolios,” said Christophe Girondel, global head of distribution at Nordea. “With these funds, we offer clients additional solutions to help decarbonise their portfolios.”
Premier Miton rolls out first sustainable multi asset fund
10 January 2022
Premier Miton is set to offer its first sustainable multi asset fund as it rebadges the Premier Miton Balanced Multi Asset fund.
From 1 March 2022, the fund will be renamed the Premier Miton Diversified Sustainable Growth fund. The name change reflects its updated investment policy and strategy, with the fund focusing on investments with a strong ESG profile and those the investment team believes reflect long-term sustainable growth themes.
The fund is Premier Miton’s first dedicated sustainable multi asset fund.
Premier Miton revealed the fund was to be given a sustainable makeover last year as part of a wider restructure of its multi asset desk. Chief investment officer Neil Birrell (pictured) took over from existing managers David Jane and Anthony Rayner and the fund was absorbed into his diversified multi asset range.
Though the fund has struggled to attract assets since launching in January 2018, in the year the changes were announced it has grown from £2.4m to £6.2m, according to Trustnet. It is in the top quartile of funds in the IA Mixed Investment 40-85% Shares sector over three years.
Premier Miton said the types of companies that fit the fund’s new ESG criteria and sustainable themes tend to operate in “faster growing sub-sectors of the economy” so should be less affected by changing market conditions.
Commenting on the changes Birrell said: “There is significant demand for sustainable funds from advisers and their clients and we are delighted to be able to offer Premier Miton’s first dedicated sustainable multi asset fund from March 2022.
“The Diversified funds have built a very strong long-term risk-adjusted performance track record, and, like all the Diversified funds, this fund will optimise the security selection skills of our specialist investment teams covering fixed income, equity, property shares and other assets including alternative investments.”
PGIM adds income fund to ESG range
21 December 2021
US investment manager PGIM has launched an ESG income fund focusing on a broad range of sectors.
PGIM Strategic Income ESG Fund is managed by Michael Collins, Gregory Peters, Richard Piccirillo, Lindsay Rosner and Robert Tipp and is underweight US treasuries and agency mortgage-backed securities, instead preferring to peruse the entire global fixed income spectrum and then use a proprietary ESG impact rating framework to assess issuers’ impact on the environment and society.
“The new UCITS portfolio will tilt towards issuers with higher ESG ratings, thus meeting the growing demand from sustainability-minded investors,” said Kimberly LaPointe (pictured), head of PGIM Investments International.
Peters added: “While spreads in many credit sectors have tightened considerably over the past 18 months, the combination of high cash balances and low rates are likely to continue pushing investors further out along the risk spectrum in a search for yield. However, narrower spreads leave little room for error, and the uncertain course of the long-term economic recovery warrants a discerning approach to credit selection.”
The fund is PGIM’s seventh ESG Ucits strategy for non-US investors. It is a sub-funds of the Irish-domiciled UCITS fund umbrella, PGIM Funds plc, and will be registered for sale in the UK and various European jurisdictions.
Schroders boosts sustainable range with two additions
Schroders has added two more sustainable funds to it range – a Global Climate Leaders Fund and a food and water strategy.
Sitting within the group’s thematic Global Transformation Range, the ISF Global Climate Leaders Fund is managed by managers Simon Webber and Isabella Hervey-Bathurst. It will invest in ‘climate leaders’ identified as companies with ambitious targets to decarbonise, encompassing the likes of reducing their carbon emissions to carbon removal, consistent with achieving a 1.5 degree scenario or better under the Paris Agreement for climate change.
It will follow the same investment process as the existing SISF Global Climate Change Fund and invest in 50-80 stocks around the world. It is classified as Article 8 under SFDR.
Hervey-Bathurst commented: “Historically companies have not been rewarded for investing to help decarbonise more rapidly than their peers. As society and policymakers pivot towards penalising inactivity and rewarding the companies that support tackling climate change, these investments will change from being a cost to a competitive advantage. We believe climate leaders will create more value while exhibiting lower risk.”
Meanwhile, the Schroder ISF Global Sustainable Food and Water Fund will be managed by Mark Lacey (pictured), Felix Odey and Alex Monk.
Also sitting within the Global Transformation Range, the fund will invest in emerging technologies and strategic industries integral to changing the food and water system, including opportunities across key value chains such as water management, food production and processing, distribution, and recycling.
Lacey said: “Our current food and water system is untenable and will experience an unprecedented confluence of pressures over the next 30 years. By 2050 the world will need to produce 70% more food and drinking water, whilst producing less carbon and using 70% fewer resources.
“Regulation, consumer behaviour, and new technology are changing fast. These are now starting to impact the long overdue change that is required to make the whole system less carbon intensive, wasteful and polluting, whilst improving biodiversity and encouraging healthier diets globally. Current estimates suggest this structural shift will require at least $30 trillion of capital reallocation by 2050.
“We believe companies whose products and services are facilitating this movement will be in great demand and can exhibit strong long-term growth potential. That is why SISF Global Sustainable Food and Water will invest across the entire food value chain, allowing us to capture this whole opportunity
It will be more highly concentrated than its new counterpart with 35-60 holdings, filtered down from a focus list of 190 stocks identified by the team. It is classified as Article 9 under SFDR.
DWS launches ESG government bond ETF
Xtrackers, the ETF business run by DWS, has unveiled a government bond ETF that screens sovereign bonds for ESG credentials.
Linked to the new FTSE Russell ESG global government bond index, the Xtrackers ESG Global Government Bond ETF has listed on the Deutsche Börse and the London Stock Exchange this week. The group said the ETF’s index methodology aims to provide meaningful ESG tilting using an in-depth assessment system that draws upon 41 ESG indicators as well as broadly recognised external data points.
Simon Klein (pictured), DWS global head of passive sales, said: “The new Xtrackers ESG Global Government Bond ETF aims to provide enhanced ESG characteristics while maintaining attractive risk-adjusted performance metrics. The goal is to provide a depth of analysis that moves the market forward in terms of providing intelligent and nuanced ESG exposure.
“With this addition to our ETF suite, investors now have a diverse range of Xtrackers ESG exposures they can use, across equities and fixed income.”
It carries an all-in fee starting at 0.20%.
Aviva Investors launches social and biodiversity strategies
Aviva Investors has launched the Social Transition Global Equity Fund and Natural Capital Transition Global Equity Fund.
Joining the group’s sustainable transitions range, which already includes Climate Transition Global Equities, European Equities, Global Credit and Real Assets Funds, the strategies will aim to support and accelerate the transition to net zero by investing in companies managing their social and environmental impacts and providing solutions to support the transition to a sustainable future for both people and planet.
Aviva Investors highlighted social inequality and biodiversity loss are major issues, with the majority of the global population living in countries where the wealth gap is growing, while there has been a 68% decrease in species populations between 1970 and 2016.
The Social Transition Fund is aligned with SDGs 5, 8 and 10, selecting investments that are changing their business models to respect human rights, promote decent working conditions and engage in responsible corporate behaviour, while also looking for companies that are providing solutions towards improved access to education and health and wider financial inclusion.
Managed by portfolio managers Richard Saldanha and Matt Kirby and senior impact analyst Vaidehee Sachdev, the fund builds on the social transformation framework created by the World Benchmarking Alliance (WBA) to assess companies’ social performance. Aviva Investors has also committed to donating 5bps of its management fee to social impact projects.
Meanwhile, the Natural Capital Transition Fund is aligned with SDGs 12, 13, 14 and 15 investing in companies that provide solutions and are transitioning their business models across the themes of sustainable land, sustainable oceans, the circular economy and climate change. It will exclude firms involved in certain harmful activities or severe environmental controversies. It is run by portfolio managers Julie Zhuang and Jonathan Toub and senior impact analyst Eugenie Mathieu.
Mark Versey, CEO of Aviva Investors, said: “There has, quite rightfully, been much focus on the path to net zero carbon emissions during the UN Climate Change Conference (COP26), but we should not forget that social issues and biodiversity are also important drivers of the transition to a fair and sustainable economy.
“21% of the global population lives in extreme or moderate poverty and only 27% of global managerial positions are occupied by women. Furthermore, 14 of the 18 ecosystem services on which society depends have been degraded or are in decline. This is alarming because over half of global GDP is dependent on high functioning biodiversity and ecosystems.”
JPMAM adds climate change SICAV
15 December 2021
J.P. Morgan Asset Management (JPMAM) has launched a Climate Change Solutions Fund, it’s first Article 9 SICAV as classified under SFDR.
Managed by portfolio managers Francesco Conte, Yazann Romahi and Sara Bellenda (pictured), the strategy will invest in companies developing and scaling solutions to address climate change. These companies could include those producing clean energy such as wind, solar, or hydro for a renewable ecosystem; investing in less carbon-intensive forms of agriculture or construction; investing in sustainable forms of transportation and developing technologies to reduce waste.
It will use JPMAM’s proprietary natural language processing tool, ThemeBot, to screen nearly 13,000 stocks globally, in search of small and mid-cap investment opportunities which are change makers in terms of climate change solutions
Massimo Greco, head of EMEA funds at JPMAM, said: “We’re very happy to be extending our Climate Change Solutions thematic offering to international investors looking for an innovative and differentiated solution to add to their client’s portfolios. By combining artificial and human intelligence, our strategy seeks to capture innovative investment opportunities and technologies facilitating the low carbon transition.”
Premier Miton renames UK fund
15 December 2021
Premier Miton Investors has renamed its Ethical Fund to the Responsible UK Equity Fund to better reflect the portfolio.
The company said the fund invests in UK equities that act responsibly and have a positive influence on society and the environment. It is run by UK equity growth team managers Jon Hudson and Benji Dawes who work closely with the responsible investing team, led by Helene Winch.
The investment policy has also been updated to provide investors with more detail on the fund’s focus on ESG companies.
Dawes said: “We see the fund’s name change to the Premier Miton Responsible UK Equity Fund and the update to the description of the responsible investment approach as an important milestone in the fund’s development.
“The fund will be labelled as a dedicated responsible investing fund and clearly described as a fund focused on companies that act responsibly with a strong ESG profile and that are part of long term themes that have a positive influence on society and the environment.”
WisdomTree creates ETF to invest in genetics and biotechnology
8 December 2021
WisdomTree has brought to market a BioRevolution ETF, investing in companies expected to lead the transformations and advancements in genetics and biotechnology and meet the firm’s ESG criteria.
Listed today on the London Stock Exchange and Börse Xetra, the BioRevolution ETF will track the price and yield performance of the WisdomTree BioRevolution ESG Screened Index.
WisdomTree leveraged insights from Dr Jamie Metzl, on the construction of the WisdomTree BioRevolution ESG Screened Index, which identifies the key sectors and industries that are expected to be most significantly transformed by advances in biological science and technology.
“The genetics and biotechnology revolutions won’t just change our healthcare systems, allowing us to live healthier and longer lives,” explained Dr Metzl, author of Hacking Darwin: Genetic Engineering and the Future of Humanity. “They will also fundamentally transform our world far beyond healthcare. The same technologies driving healthcare innovation will have a seismic impact on industries including agriculture, materials, energy, and information processing, revolutionizing the ways we treat disease, grow food, produce materials, and process data. If the 19th was the century of chemistry and the 20th of physics, the 21st will be the century of biology. I am delighted to be collaborating with the amazing team at WisdomTree and uncovering some of the opportunities presented by this historic megatrend.”
Alexis Marinof (pictured), head of Europe at WisdomTree, added: “Our approach of partnering with sector experts to construct indices within our thematics product range has resonated with investors and delivered strong investment performance. This approach has contributed to the building of a $1.8bn platform of differentiated thematic products which providing transparent and pure sector exposure in an ETF. WDNA brings together all the elements of the biology revolution and is at the sweet spot of innovation and diversification.”
The ETF has an expense ratio of 0.45%.
Vanguard launches active ESG strategies
Vanguard has stepped up competition in the sustainable fund space with the launch of four actively managed strategies – a move that suggests the fund group is finally getting up to speed on ESG.
On 8 December, as reported by ESG Clarity’s sister title Portfolio Adviser, the asset manager unveiled the Vanguard Sustainablelife range, comprising three multi-asset funds, and the Vanguard Global Sustainable Equity fund.
Sustainablelife is an actively-managed range, including a 40-50% equity, 60-70% equity and 80-90% equity option. All three funds are managed by Wellington Management Company and invest in global equities and bonds, with an ongoing charges figure of 0.48%.
See also: – Vanguard Q&A: Empowering shareholders
The range applies ESG criteria to each of the companies it invests in based on four sustainability principles: a commitment to net zero by 2050; exclusion of companies involved in areas such as thermal coal, tar sands and tobacco; engagement with portfolio companies on material ESG issues; and for companies to follow good governance practices as a precondition for investment.
The Global Sustainable Equity fund invests in global companies, while actively incorporating sustainable investment criteria. The fund is also managed by Wellington and has a commitment to net zero emissions by 2050, as well as an OCF of 0.48%.
Vanguard now has 10 ESG funds and ETFs available to UK investors.
Vanguard head of ESG strategy, Europe, Fong Yee Chan said: “Today’s launch represents our commitment to helping investors balance their personal values with their financial goals as interest in sustainable investing continues to grow.”
Stewart Investors makes sustainable EMs strategy available in Europe
7 December 2021
Stewart Investors has extended the reach of its popular Global Emerging Markets Leaders Sustainability Fund by launching an OEIC and Irish VCC for UK and European investors.
The fund, managed by David Gait and Jack Nelson, was initially launched to US clients in 2020 and more recently to Australian investors, and has amassed £522.6m, according to FE fundinfo.
The group announced on 7 December the fund is now available in the UK as an OEIC and in early 2022 an Irish VCC will be launched for the UK, European Economic Area and Switzerland.
It invests in high-quality, mid- to-large-cap companies that are considered to be well positioned to contribute to, and benefit from sustainable development, with a focus on delivering long-term capital growth over market cycles.
Gait said: “We have seen a significant increase in demand for our global emerging markets capability in Europe, particularly given our keen focus on sustainability. At Sustainable Funds Group [part of Stewart Investors] we constantly seek out companies who are well positioned to meet the challenge of, and benefit from, sustainable development, and are thus better placed to deliver solid absolute returns over the long term. We look forward to offering this investment opportunity to our customers across Europe.”
PGIM rebrands suite of fixed income funds as ESG
2 December 2021
PGIM has repositioned four of its bond strategies to incorporate ESG principles.
The group said conversations with clients, who said ESG considerations had become central to decision making for asset allocators, led to the decision to rebrand the products and introduce ESG investment objectives.
The PGIM Emerging Market Corporate Bond Fund has become the PGIM Emerging Market Corporate ESG Bond Fund, while the PGIM European Corporate Bond Fund is the PGIM European Corporate ESG Bond Fund.
Meanwhile, the PGIM US BB-B High Yield Bond Fund has taken on a global mandate, as well as a broader ability to invest across the sub-investment grade credit spectrum. It is now the PGIM Global High Yield ESG Bond Fund, benchmarked against the ICE BofA Developed Markets High Yield Constrained Index.
Similarly, the PGIM European BB-B High Yield Bond Fund can now invest more broadly within the high yield credit space, and has been renamed PGIM European High Yield ESG Bond Fund. A new benchmark has been adopted – ICE BofA European Currency Non-Financial High Yield 2% Constrained Index.
Sarah McMullen, head of EMEA, PGIM Fixed Income, commented: “The explicit repositioning of these four fixed income strategies better reflects the work undertaken by our investment teams in identifying the most compellingly valued investment opportunities across the fixed income universe, with a strong focus on environmental and social sustainability.”
abrdn adds sustainable EM debt fund focusing on SDGs
1 December 2021
abrdn has launched an Emerging Markets Sustainable Development Corporate Bond Fund to be managed by Samuel Bevan, Siddharth Dahiya and Kevin Craig.
The firm highlighted emerging markets currently require over $2.5trn per year in additional investments to meet the SDGs by 2030, and needs are especially acute in financial inclusion, food security, access to healthcare, basic infrastructure and climate change mitigation and adaptation, including renewable energy, low-carbon cities, and sustainable forest management.
An SFDR Article 9 fund, the new product will allocate capital to companies positively contributing towards the UN’s Sustainable Development Goals and aims to deliver ‘profit with purpose’ by investing in bonds addressing climate change, growing social inequality, and unsustainable production and consumption.
Dahiya (pictured), head of emerging market corporate debt, said: “Investors are increasingly becoming much more aware of the challenges that the world faces today and how their money can be invested to truly make an impact. This new strategy is among one of the first in the EMD marketplace to have a sustainable investment objective, complementing abrdn’s already established Article 9 fund range and broadening the pool of our sustainable investment products on offer to our clients.”
The fund will sit alongside the firm’s Asian Sustainable Development Equity Fund and Emerging Markets Sustainable Development Equity Fund and use its eight-pillar SDG Investment Framework, which was launched in 2017.
BNPP AM aligns 18 ETFs with ESG indices
1 December 2021
BNP Paribas Asset Management (BNPP AM) has boosted the number of SFDR Article 8 and 9 funds in its range after aligning 18 of its ETFs with ESG indices and Paris-aligned benchmarks.
The following ETFs will begin tracking the SRI series of the MSCI indices or adopt the characteristics of Paris-aligned benchmarks:
- BNP Paribas Easy MSCI Emerging SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI Europe Small Caps SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI USA SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI World SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI Japan SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI Europe SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI EMU SRI S-Series PAB 5% Capped
- BNP Paribas Easy MSCI Emerging ESG Filtered Min TE
- BNP Paribas Easy MSCI Europe ESG Filtered Min TE
- BNP Paribas Easy MSCI Japan ESG Filtered Min TE
- BNP Paribas Easy MSCI North America ESG Filtered Min TE
- BNP Paribas Easy MSCI Pacific ex Japan ESG Filtered Min TE
- BNP Paribas Easy ESG Low Vol Europe
- BNP Paribas Easy ESG Low Vol US
- BNP Paribas Easy ESG Momentum Europe
- BNP Paribas Easy ESG Quality Europe
- BNP Paribas Easy ESG Value Europe
- BNP Paribas Easy ESG Dividend Europe
Isabelle Bourcier, head of quantitative & index management at BNPP AM, said: “The move towards sustainable indices, including PAB, is a decisive step and a major axis of our development, which reaffirms our ambition to position ourselves as a key player in index solutions integrating ESG and decarbonisation. Since mid-2017, all of our ETF launches have focused on sustainable indices with the aim of having a predominantly responsible range.”
BNP Paribas launches social bond fund
25 November 2021
BNP Paribas has launched a social bond fund to target essential services, inclusive companies and help small businesses in emerging markets access financial services.
The BNP Paribas Social Bond Fund will invest 75% in sustainable bonds providing water, health, affordable housing, employment, food security, socioeconomic progress or basic infrastructure. The remainder will be invested 25% in socially responsible companies and 10% in microcredit instruments for emerging markets.
Arnaud-Guilhem Lamy, head of Euro aggregate bond strategies at BNP Paribas Asset Management and manager of BNP Paribas Social Bond fund, said: “The growing importance of bonds within thematic management, historically more geared towards equities, and the emergence of social considerations among investors are two major developments in our industry.”
Saturna Capital and HANetf team up for Shariah-compliant ESG ETF
24 November 2021
Saturna Capital and HANetf have launched an Islamic-compliant ESG ETF.
The Saturna Al-Kawthar Global Focused Equity UCITS ETF will be an ‘active’ ETF and will invest in 30-40 Shariah-compliant ESG companies.
Scott Klimo, CIO of Saturna Capital, said: “Saturna Capital believes including ESG factors in an Islamic portfolio further reduces risk, leading to more resilient portfolios and that companies proactively managing business risks related to ESG issues are more resilient and make better contributions to portfolios designed for patient investors. We are therefore delighted to launch the Saturna Al-Kawthar Global Focused Equity UCITS ETF to investors looking for an actively managed ethical fund that invests globally and is benchmark agnostic in terms of geographic and industry allocations.”
Commenting on the rise of active ETFs, Hector McNeil, Co-CEO of HANetf, said: “Active ETFs are the next frontier for the European ETF market. Regulators have played a major role in the rise of active ETFs in the US and what happens in the US tends to follow here. Typically, the US is two to three years ahead in AUM growth and product innovation. If this is the case, then it’s only a matter of time before active ETFs become commonplace in Europe. Over the past two years active ETFs have gone from nowhere to being the main battleground for providers in the US and we expect that to follow suit to Europe.
“It’s still early days for active ETFs but watch this space. My prediction is it will be the hottest growth area in two- or three-years’ time. However, it will mean European regulators having to follow the SEC and allow flexibility to active managers around disclosure.”
M&G rolls out ESG funds on international portfolio bond
24 November 2021
M&G has unveiled the PruFund Planet range of funds on its international portfolio bond.
The firm said the products are the “UK’s first” range of risk-rated, actively managed, multi-asset funds, which aim to generate competitive returns and positive environmental and social outcomes at the same time.
The PruFund Planet range will be available via M&G’s retirement account and international portfolio bond products, with Isas and other bond versions to be made available next year.
Michael Leahy, managing director of Prudential International Assurance, said: “Extending the availability of PruFund Planet to the international portfolio bond gives advisers and their clients yet another way to access the people and planet-focused version of our market-leading smoothed investment solution.
“Crucially, it combines the tax benefits and planning opportunities offered by an offshore bond with the real and growing need for advisers whose clients, particularly in retirement, are increasingly looking for a smoothed investment journey, while seeking to make a positive difference to the planet.”
The range first launched in July 2021 and comprises of five funds, PruFund Planet 1 to 5, which seek to manage risk, pursue opportunities and invest in “high-impact solutions” to the world’s most pressing ESG challenges, the firm added.
BlueBay launches ESG fixed income fund
23 November 2021
BlueBay Asset Management has unveiled its latest ESG strategy, the BlueBay Total Return Diversified Credit ESG Fund.
The fund will avoid companies involved with oil sands and arctic drilling and limit exposure to companies related to thermal coal or fossil fuel exploration and production. It will also exclude sovereigns that have not ratified the Paris Agreement. In addition, controversial weapons, a standard exclusion for all BlueBay funds, and tobacco will not be included.
It will be managed by BlueBay’s head of multi-asset credit, Raphael Robelin, and senior portfolio manager Blair Reid, supported by portfolio manager Maria Satizabal.
Reid said: “Our approach is to target a similar yield to our standard MAC strategy by adjusting the credit risk within our MAC ESG strategy (BB on average for MAC ESG, versus BB+ for standard MAC). We are excited to be launching this latest iteration of our multi-asset credit offering.”
Credit Suisse and JPMAM launch sustainable nutrition fund
22 November 2021
Credit Suisse and JP Morgan Asset Management (JPMAM) have joined forces to launch a nutrition fund investing in companies that link nutrition, health, biodiversity and climate.
The Credit Suisse JPMorgan Sustainable Nutrition Fund was launched last week seeded with $250m.
It targets the United Nations’ Sustainable Development Goals 2 (Zero Hunger) and 13 (Climate Action) by selecting small and mid-cap innovators across the value chain – from growing, processing to consuming food to feature in the global equity portfolio. Some 40-60 stocks will be held carrying out activities such as vertical farming, plant-based proteins and food testing, which all sit within three subthemes: sustainable agriculture, efficient food processes and sustainable & healthy diets.
Jennifer Wu, global head of sustainable investing at JPMAM, commented: “As we transition towards a more sustainable global economy, a focus on sustainable nutrition should sit at the heart of this transition. This new strategy seeks to make a positive contribution to a healthier future, investing in companies which are seeking to address current inefficiencies in the food value chain by making food systems less carbon intensive and ultimately enabling healthier diets.”
UNCDF partners with Impact Shares for ETF
4 November 2021
The United Nations Capital Development Fund has collaborated with non-profit ETF firm Impact Shares to launch an ETF.
Announced at COP26 in Glasgow this week, Impact Shares MSCI Global Climate Select ETF has been listed on the New York Stock Exchange. It tracks the MSCI ACWI Climate Pathway Select Index and aims to tackle Sustainable Development Goal 13, which is ‘Take urgent action to combat climate and its impacts’.
It includes UN values in its methodology: companies in the index must abide by the UN Global Compact, and firms that profit from weapons, guns, alcohol, tobacco, palm oil and any form of fossil fuel are excluded.
Preeti Sinha (pictured), executive secretary of UNCDF, which is partnering with ESG Clarity on it’s upcoming Global ESG Summit on 2 December, commented: “The need to address climate change impacts has never been clearer, especially for the world’s poorest and most vulnerable countries.
“We at UNCDF are very proud to support the Global Investors for Sustainable Development (GISD) Alliance by issuing our second ETF with Impact Shares.
“The ETF demonstrates UNCDF’s ability to create innovative financial products that appeal to investors and continue to raise impact standards. And the fee donation will help the UN build climate resilience in the world’s LDCs.”
Rainforest fund seeks to mobilise $100bn
4 November 2021
A global rainforest fund is seeking to raise $100bn to provide investment funds to sovereign rainforest nations through the United Nations Framework Convention on Climate Change’s (UNFCCC) carbon trading platform, REDD+.
The Global Rainforest Fund Capital Market Initiative soft launched last week and is looking for institutional investors to partner with for the project.
According to Fund Nature, the group behind the initiative, there is a huge opportunity as the current global carbon market only covers 21.5% of emissions globally, leaving around 30 gigatons of buy-side demand.
Fund Nature founder and director, Michael Mathres, said the vision is ultimately to stop and reverse deforestation. The two critical elements are to move the carbon price higher so it is aligned with 1.5°C of global warming and applying the rainforest to the capital market by making the REDD+ market liquid.
“The very simple economic facts we deal with currently are rainforests are getting chopped down because it is more economic to do so. It means they are worth more down than up and until we can change that dynamic it is going to continue,” said Alistair Mullen, co-director of Fund Nature.
The REDD+ website states the carbon credit issuers are the national governments of rainforest nations and the standards used were created under UNFCCC processes, approved by COP decisions, and enshrined in the Paris Agreement.
AXA IM rebrands UK fund
4 November 2021
AXA Investment Managers has repurposed an existing UK equity strategy to integrate ESG practices.
The AXA Framlington UK Growth Fund has been renamed the AXA Framlington UK Sustainable Equity Fund to reflect its new mandate of investing in companies the manager finds that can demonstrate leadership on sustainability issues.
The strategy looks to capture secular growth through three sustainable growth themes – People, Planet and Progress:
- People – Ageing demographics and increased social awareness are creating powerful structural growth opportunities in areas such as healthcare, financial planning & leisure activities.
- Planet – The importance of limiting temperature rises is accelerating the need to dramatically cut carbon emissions, increase the amount of renewable energy and use the planet’s resources more sustainably.
- Progress – The relentless focus on digitisation provides a route towards sustainability, carbon neutrality, equality and improving skills worldwide. Companies also play a critical role in keeping us safe as more people move online.
Commenting on the launch, Nigel Yates, manager of the AXA Framlington UK Sustainable Equity Fund, said: “We view ESG integration as part of expressing our conviction as long-term responsible investors, avoiding negative issues that can damage portfolio returns but also influencing management to take the right steps towards enhancing their sustainability profile and practices. The UK market offers access to exciting businesses, many of which are benefiting from sustainable secular growth drivers, strong management teams and the UK’s quality corporate governance regime.”
Aegon to launch global sustainable sovereign bond fund
22 October 2021
Aegon Asset Management and Aegon UK have partnered with the Global Ethical Finance Initiative (GEFI) to launch the Aegon Global Sustainable Sovereign Bond Fund at COP26 with an initial £100m investment from Aegon UK.
The fund will be available to workplace pension savers through Aegon UK’s Universal Balanced Collection, which is used by many as a default fund, as well as being available directly, and will be managed by Aegon AM’s global fixed income specialists.
This team is supported by the global responsible investment team, led by Brunno Maradei, who said: “We are delighted to be selected by GEFI as a leading example of sustainable investing. We are proud to work with them and our partners at Aegon UK to promote the new fund at COP26. The alignment of sovereign portfolios with the global sustainability agenda facilitates responsible capital allocation, which has positive long-term social and environmental impact.”
Credit Suisse and BlackRock team up for wellbeing fund
21 October 2021
Credit Suisse and BlackRock have partnered to launch the Health and Wellbeing Fund for the private wealth market.
The fund will target four themes: physical health and wellbeing, mental health and development, nutrition and resources, and financial health.
Lydie Hudson, CEO of sustainability, research and investment products at Credit Suisse, commented: “This joint private market investing program leverages the scale, expertise and strength of both firms to deliver a strong investment experience and outcomes for clients.”
J.P. Morgan launches US sustainable equity fund
20 October 2021
J.P. Morgan Asset Management has launched the JPM US Sustainable Equity Fund investing in a broad selection of companies defined as sustainable.
The fund will be managed by David Small, director of US equity research and Danielle Hines, associate director of US equity research, who will be looking for companies displaying strong governance, superior management of environmental and social issues and have durable economic models.
Dale Erdei, head of UK funds at J.P. Morgan Asset Management, said: “US Sustainable Equity seeks to meet the ongoing client demand for well-designed strategies that can step beyond ESG integration while maintaining a focus on delivering strong risk-adjusted investment performance.”
JPM US Sustainable Equity Fund (OEIC) will have a Total Expense Ratio of 65 basis points (C-share class).
EQT targets €4bn for Future Fund
20 October 2021
EQT is targeting €4bn to launch a future impact fund investing in companies making an impact on the planet, people and prosperity.
Holdings in the EQT Future Fund look to reduce greenhouse gas emissions using science-based targets, improve employee wellbeing, and increase gender diversity to a 50/50 split within the top 20% of the company. Up to 20% of EQT Future’s total carried interest will be linked to achieving the portfolio-level KPIs.
EQT Future will be supported by a mission board, co-chaired by Paul Polman, former CEO of Unilever, UN Sustainability Ambassador, and co-founder of IMAGINE, a social enterprise focused on sustainable transformation, and Jacob Wallenberg, chairperson of AB and vice-chairperson of ABB and Ericsson.
Polman said: “There is an enormous opportunity to invest in businesses that give back more than they take and I am a firm believer that success will come to those who focus on solving the world’s problems. As co-chair, I will focus on the purpose and impact thesis of EQT Future’s investments and leverage my network to connect the team with the right skills and people.”
Polar Capital launches two ‘Smart’ funds
18 October 2021
Polar Capital has launched two ‘Smart’ funds run by Thiemo Lang and his sustainable thematic equity team.
Polar Capital Smart Energy is a global energy fund investing in technology solutions for decarbonisation, while Polar Capital Smart Mobility invests in global companies transforming the transport sector. Both are classified as Article 9 under SFDR.
Lang said: “Investments in solution providers addressing environmental challenges have clearly gained momentum. Over the next decades we will witness a strong decarbonisation of the global energy sector, driven by clean power generation, affordable storage solutions and the deployment of the newest technologies driving down energy consumption. The electrification of the whole transportation sector is at the very heart of these transformational changes. These are truly exciting times for us all, investing in the technology leaders that shape the sustainable energy world of tomorrow.”
GIB and Amundi partner for sustainable world fund
12 October 2021
GIB Asset Management and Amundi Ireland have teamed up to launched the GIB AM Sustainable World Fund, a sustainable global equity fund.
The Article 9 fund is benchmarked against the MSCI World Index and managed by head of equities Neil Brown, who said: “We employ a six-stage approach to find the businesses whose products are solving the greatest challenges of our time, whose operations are sustainable and who can use this to outperform their peers.”
Wellington launches global climate equity fund
6 October 2021
Wellington Management has launched a global climate equity fund.
The Wellington Climate Market Neutral Fund will hold both long and short positions, establishing long positions in climate-advantaged companies but still holding companies that will be disadvantaged by climate change mitigation for shorter periods.
It is classified as Article 8 under the SFDR regulation but does not have a sustainability-related investment objective.
Stefan Haselwandter, senior managing director and head of client group at Wellington, said: “Most companies have a degree of climate exposure, but not all companies are positioned to respond to climate risks and opportunities, creating relative winners and losers in the market. As evidence of climate risk mounts over time, this presents an increasing and dynamic long/short investment opportunity set.”
The Fund will be managed by Alan Hsu, managing director and equity portfolio manager, who has 13 years’ experience conducting fundamental analysis and research on the utilities, energy and renewable energy and clean technology sectors. The strategy leverages Wellington’s partnership with Woodwell Climate Research Center, an independent climate-research institute.
Natixis Mirova Global Sustainable Equity fund launches
6 October 2021
Natixis Investment Managers affiliate Mirova has launched a global sustainable equity fund for UK investors.
The Natixis Mirova Global Sustainable Equity Fund will mirror the existing Mirova Global Sustainable Equity SICAV, launched in 2013, and will be managed by Jens Peers, Amber Fairbanks and Hua Cheng.
Its investment selections are based on demographic, environment, technology and governance transitions, as well as gaining exposure to companies that have a positive impact on the UN Sustainable Development Goals. The fund is aligned to a 2C global warming scenario and will typically have 40-60 holdings, aiming to outperform the MSCI World Net Dividends Reinvested Index.
Fairbanks said: “The SICAV version of this diversified equity fund has proven incredibly popular both as a core global equity holding and to complement the existing global equity allocation of investors’ portfolios. We have seen a strong demand from investors in the UK and this OEIC will allow them to more easily access the fund and make a meaningful difference to the sustainability profile of their portfolios.”
Nuveen adds to sustainable real asset platform
6 October 2021
Nuveen has added Nuveen Natural Capital and Nuveen Infrastructure to its real asset platform, which adopts a sustainable investment approach.
Nuveen Natural Capital combines Westchester Group Investment Management, Nuveen’s farmland investment business, with GreenWood Resources, which specialises in the acquisition and stewardship of forestry assets. Martin Davies, current CEO of Westchester Group, will lead Nuveen Natural Capital
Nuveen Infrastructure will combine private equity and equity-like strategies through Glennmont Partners, alongside Nuveen’s existing diversified private infrastructure platform and its agribusiness, AGR Partners. Following a 16 year period at Nuveen, Biff Ourso will be the global head of Nuveen Infrastructure.
These join Nuveen Real Estate, which remains under the leadership of Chris McGibbon.
Nuveen CEO of Real Assets, Mike Sales said: “We will be better positioned to meet growing global investor demand for long-term sustainably managed investments.”
LGIM unveils sustainable property fund
4 October 2021
Legal & General Investment Management (LGIM) has launched a sustainable property fund to meet demand from DC schemes for ESG real assets.
The Sustainable DC Property Fund adopts ESG investment targets, including net-zero operational carbon in the direct portfolio by 2030, and has estimated the social value created by the fund in order to measure social impact.
Veronica Humble, head of DC investments for LGIM, said: “Our research shows that DC members care deeply about ensuring that their pensions are invested in a responsible manner. The Sustainable DC Property Fund has ambitious carbon reduction targets and provides diversification through access to an alternative asset class that combines income and long-term capital growth.”
In addition to targeting assets across sectors the Fund will target a 30 per cent allocation to the L&G Global Real Estate Equity Index Fund to provide liquidity and support daily dealing for DC clients.
Michael Barrie, director of fund management for LGIM Real Assets, said: “Real estate is central in the transition to net zero as buildings play a major role in supporting a low-carbon economy and society. The demand for real assets is growing, three quarters of our recent major investment consultant conversations in DC Distribution have emphasised demand for them.”
abrdn launches a global responsible investment strategy
30 September 2021
abrdn has announced a new strategy targeting a 50% reduction in weighted average carbon intensity compared to passive global equities.
The Responsible Global Asset Strategies (RGAS) Fund comprises 20 to 30 global investment strategies and targets a return in excess of 5% over cash1 and a volatility of 4-8% per year over three-year periods.
The managers of the Fund are Katy Forbes, Gerry Fowler and Catie Wearmouth of the Multi-Asset Solutions team.
To assess ESG risk, the team uses abrdn’s proprietary ESG House Score developed by its central ESG investment team to assess companies in terms of their responsibility and environmental sustainability. The team ranks countries according to ESG and political factors and excludes those with the highest risk. Currently the Fund would not invest in the sovereign bonds or currencies of China, Turkey or India.
Mirova launches sustainable pan-European private equity fund
29 September 2021
Mirova is targeting environmental innovation and technology solutions with its new new pan-European private equity fund.
The Mirova Environment Acceleration Capital Fund, which is classified as Article 9 under SFDR, aims to help sustainable businesses up-scale, invest in megatrends, and support innovation and technology, across five themes: smart cities, natural resources, agri-agro technologies, circular economy and clean energy.
The target companies will have the following profile:
- a business model directly addressing at least one of the targeted SDGs;
- mature innovative solutions and technologies;
- companies implementing or willing to implement strong ESG standards;
- companies with a proven business model;
- companies tjat are profitable or almost profitable;
- a transaction in which the majority of the proceeds will be used for a capital increase to accelerate the company’s growth.
The fund’s management team will be led by Marc Romano, head of private equity impact. He said: “Private equity investors have an essential role to play in facilitating the development of impact business models, by providing capital that drives the acceleration of innovative companies and the solutions they offer to environmental challenges.”
The fund aims to raise €300 million from institutional and private investors.
Northern Trust launches two climate ETFs
27 September 2021
Northern Trust Asset Management has launched two climate-focused ETFs.
The FlexShares® Emerging Markets High Dividend Climate ESG UCITS ETFis designed to offer exposure to high-quality, dividend paying emerging market stocks while seeking to achieve ESG and climate related improvements. It assesses companies across: management efficiency, profitability and cash flow.
The FlexShares® Emerging Markets Low Volatility Climate ESG UCITS ETF will offer exposure to a high-quality universe of emerging markets companies that exhibit lower overall absolute volatility while seeking to achieve ESG and climate-related improvements. It aims to minimize overall portfolio volatility, improve ESG score, improve carbon risk rating and reduce carbon emissions intensity.
FlexShares partnered with index provider Qontigo to develop the iSTOXX Northern Trust Emerging Markets High Dividend Climate ESG Index, which will be the benchmark for the high dividend ETF, and the iSTOXX Northern Trust Developed Markets Low Volatility Climate ESG Index, which will be the benchmark for the low volatility ETF.
DWS’ Xtrackers unveils 10 ESG European equity ETFs
22 September 2021
The ETF arm of DWS Xtrackers has launched a range of 10 ESG screened ETFs.
They all track MSCI indices with ESG screens and offer exposure to European equity sectors including consumer staples, healthcare and energy.
The products are:
|ETF||Annual All-in Fee|
|Xtrackers MSCI Europe Communication Services ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Consumer Discretionary ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Energy ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Financials ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Health Care ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Industrials ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Information Technology ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Utilities ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Materials ESG Screened UCITS ETF 1C||0.20%|
|Xtrackers MSCI Europe Consumer Staples ESG Screened UCITS ETF 1C||0.20%|
DWS said MSCI screens are applied with additional filtering for conventional weapons. The screens also remove the worst ESG ‘laggards’ according to MSCI’s ESG ratings system.
“We are pleased to establish these new Xtrackers ETFs providing exposure to MSCI’s ESG screened Europe sector indices. This is in line with the demand we see from clients, while the highly competitive annual all-in fees should also prove attractive,” said Simon Klein, DWS’s global head of passive sales.
Lyxor unveils ETF exposed to green corporate bonds
22 1eptember 2021
Paris-based Lyxor Asset Management has launched a green bond ETF.
The Lyxor Corporate Green Bond (DR) UCITS ETF tracks the Solactive EUR USD IG Corporate Green Bond TR Index, representative of the performance of euro and US-dollar denominated investment grade corporate green bonds compliant with the Climate Bonds Initiative criteria.
It has been listed on the Euronext, Xetra, London Stock Exchange and Borsa Italiana and offers a TER of 0.20%.
Philippe Baché, head of fixed income ETF product at Lyxor Asset Management, commented: “With the launch of this new corporate green bond ETF, Lyxor provides investors with a well-rounded green bond range – aggregate, government and corporate exposures – allowing them to pick and choose a green bond ETF best suited to their investment needs, and providing a simple way to take climate action and transition their bond portfolios towards a more sustainable economy.”
See also: – Green Dream with Lyxor’s Francois Millet: From trends to world transformation
Schroders looks to EMs for impact launch
22 September 2021
Schroders has added an emerging markets strategy to its impact fund range.
Co-managed by Jonathan Fletcher and James Gotto, the Schroder ISF Emerging Markets Equity Impact fund will be aligned with the UN’s Sustainable Development Goals, focusing on areas encompassing responsible consumption, health and wellness, sustainable infrastructure, inclusion and the environment.
It will use the firm’s proprietary impact measurement tools SustainEx and Carbon Value at Risk will be used in the investment process to create a portfolio of 30-50 holdings in emerging markets. The fund’s objective is to generate a positive impact in terms of societal contribution as well as an attractive financial return by investing in sustainably run companies whose products, services or activities help to address the social and environmental challenges faced by less developed countries.
The group said the fund is classified under the EU’s Sustainable Finance Disclosure Regulation as Article 9.
Fletcher commented: “Clients’ interest in understanding the impact of their investment decisions has never been greater. Nowhere is this more important than in emerging markets where the social challenges are often significant and where some countries are at greatest risk from the effects of climate change.
“Public companies have a critical role to play in addressing these challenges. Not only through their products and services, but also by the way they manage their operations, who they employ and their impact on the environment.
“Companies in emerging markets are largely at the early stages in their impact and sustainability journey. As active and long term owners this provides an opportunity for investors to have an impact, further increasing the positive impact that the companies have.”
Regnan announces water & waste fund launch
22 September 2021
JOHCM has announced the launch of a second investment strategy for Regnan, the responsible investment arm it acquired in 2019, in the form of a Sustainable Water and Waste Fund.
The UK onshore OEIC aims to generate capital growth over rolling five-year periods and to pursue a sustainable objective by investing in companies, which provide solutions to global water and/or waste related challenges.
The fund is managed by Bertrand Lecourt, head of thematic investment strategies at Regnan, and fund manager Saurabh Sharma. They previously worked on the Sustainable Water & Waste Fund at Fidelity before joining Regnan.
See also: – On the Move: Newton’s Parry exits for JOHCM
Bertrand Lecourt, head of thematic investments strategies, said: “I am proud and excited to launch the Regnan Sustainable Water & Waste strategy with Saurabh alongside the highly experienced and dynamic Regnan Sustainable Team. Our focus is to deliver compelling returns, diversification benefits and the highest standard of service to our investors, as global allocations shift towards more thematic and sustainable solutions.”
The fund follows the rollout of the Regan Global Equity Impact Strategy in October 2020.
It is initially open to UK investors but an Irish-domiciled OEIC sub-fund will also be launched in coming weeks, subject to regulatory approval, to allow European and Asian investors access to the investment strategy.
Amundi launches fourth private debt impact fund
10 September 2021
Amundi has raised €650m in commitments from longstanding investors for a private debt impact fund.
The fourth in its core private debt strategy, the Amundi Senior Impact Debt IV Luxembourg SICAV-RAIF will be invested solely in euros in senior private debt of around 40 companies within the European Union. The firm said it aims to offer long-term financing, of €10-100m each, to support midcaps through business recovery and expansion plans. This includes relocation of activities that support the environmental transition, and adapt to new modes of consumption.
The fund was marketed exclusively to institutional investors in France, Germany, Austria, Belgium, Denmark, Spain, Italy, Luxembourg, Netherlands, Sweden, Norway and Finland.
Thierry Vallière, head of private debt at Amundi, said: “We launched the fourth edition of Amundi Senior Impact Debt IV with the same investment philosophy as its predecessors, which proved their merits during the recent health crisis.
“The fund will focus on pure senior debt, with a risk framework consistent with the profile of each company, the systematic presence of financial covenants and a particular focus on ESG factors, with namely the integration of impact covenants for most financings as well as supporting companies with their ESG challenges. We are confident in our ability, demonstrated in each of the previous editions of the funds, to rapidly roll out and build diversified and resilient portfolios for our investors.”
Federated Hermes launch climate change fund for Lundie
10 September 2021
Federated Hermes has launched a new impact fund in the form of the Federated Hermes Climate Change High Yield Credit Fund.
Seeded by Swedish National Pension Fund AP1, the UCITS fund will give investors the opportunity to be a driving force for change and collectively make a real-world impact across all sectors, the firm said.
It will use the Climate Change Impact (CCI) Score as an investment framework and analyse the progress and impact towards decarbonisation that holdings are making. The portfolio excludes companies where engagement on climate change transition has failed, as well as controversial sectors and heavy greenhouse gas-emitting issuers that have no desire to change.
Managed by head of credit Fraser Lundie, supported by co-manager Nachu Chockalingam, it aims to generate long-term, risk-adjusted outperformance by investing in attractive high-yield credit instruments and deliver positive impact that supports a low-carbon future.
Lundie said: “The global high-yield market offers great opportunities to identify attractive companies with the willingness and ability to change their operations, products or services in order to generate positive impact for the planet. This fund is a natural extension of our existing credit offering and demonstrates our commitment to making a real difference for our climate and for future generations.
“We have always admired AP1 for setting a high bar when it comes to delivering long-term sustainable returns for its retirees and we are delighted that our pioneering and innovative approach to credit investing has enabled us to join forces one again.”
GAM outsources new climate bond fund to Geneva credit firm
10 September 2021
GAM has created a sustainable climate bond strategy exposed to green and sustainability bonds issued by the European financial sector.
It will be managed by Atlanticomnium SA, an independent Geneva-based fund management company, which has specialised in credit investing since it was founded in 1976 and has managed assets for GAM since 1985.
GAM said the new launch recognises the “pivotal role” banks will play in the environmental transition as the primary source of financing for European corporates and for small and medium enterprises (SMEs). In the first half of 2021, green bond issuance by European banks reached $10bn, driven by a record $33bn in the first half of 2021 alone.
The team will identify bonds by applying its proprietary green bond assessment framework, splits into three layers of analysis – issuer, bond and green asset level. Each layer is assessed individually, using both proprietary research and data from external third parties.
Classified as Article 9 under SFDR, the strategy will overall invest in bonds allocating proceeds to eligible green projects across market caps with measurable impact, such as renewable energy and green buildings.
Stephanie Maier, global head of sustainable and impact investment at GAM, said: “Asset and wealth managers control more than $110trn of capital and how these assets are managed will be key to whether or not we are able to achieve the shared global goal of net zero emissions by 2050 or sooner. We firmly believe asset managers need to be at the forefront in driving that change, and designing solutions to help clients navigate the low carbon transition. The sustainable climate bond strategy, is a compelling offering for investors seeking to generate both a meaningful environmental impact and attractive returns.”
LGIM launches Paris-aligned index fund
10 September 2021
Legal & General Investment Management (LGIM) has expanded its index fund range with a Paris-aligned equity product for UK and European institutional investors.
The L&G ESG Paris Aligned World Equity Index Fund will be exposed to developed market equities while also integrating Paris-aligned reductions in carbon emissions and UN SDG principles.
Classified as Article 9 under the EU Sustainable Finance Disclosure Regulation (SFDR), the fund will track the performance of the Solactive L&G Developed Markets Paris Aligned ESG SDG Index, which has been constructed by the firm to meet the minimum requirements of the Paris-aligned Benchmark (PAB) Regulations.
It has been backed by institutional investors, including London Borough of Newham Pension Fund which has invested approximately £520m, and Irish pension investors, while Legal & General’s alternative asset platform, Legal & General Capital, has also invested £100m.
James Sparshott, head of local authorities distribution at LGIM, said: “We are delighted that the London Borough of Newham Pension Fund has decided to make such a significant investment into our strategy. We recognise the urgency of addressing climate change and continue to experience demand for ESG investment strategies. In line with our own pledge to net zero emissions by 2050, we believe that taking action on climate is in the interest of long-term investors. This fund will benefit from LGIM’s track record in working with the companies in which we invest to improve their resilience to climate risks.”
Janus Henderson launches two sustainable funds
6 September 2021
Janus Henderson has launched two Article 9-classified sustainable funds focused on technology and US companies, respectively.
The Janus Henderson Sustainable Future Technologies Fund will invest in companies aligned with the UN Sustainable Development Goals and which derive at least 50% of their revenues from sustainable technology. It will be looking for emerging and overlooked technology and has identified eight technology themes that sit across the E, S and the G.
An example holding in the edtech theme is Chegg, an online learning and study support platform, which aims to help provide education to more people and increase people’s employability.
The fund’s management team comprises Alison Porter, Richard Clode and Graeme Clark, and will be supported by head of ESG investments Paul LaCoursiere.
Clode said: “Technology has the ability to deliver across all of the components of ESG; while global regulation and classification initially concentrated on environmental sustainability, this fund is looking to go much further and expand to incorporate much wider social issues. The reach of technology is limitless and the sector has a unique and critical role to play in servicing social goals; to help democratise access to services, reduce inequality and upgrade quality of life.”
The fund will be available as an OEIC and is primarily aimed at both wholesale retail and institutional investors in the UK.
See also: – Podcast: Technology must look after environment and society
The firm’s second new fund is the Janus Henderson Horizon US Sustainable Equity Fund, investing in companies responding to things such as climate change, resource constraints, population growth and ageing populations.
It will be managed by Hamish Chamberlayne and Aaron Scully, and also supported by LaCoursiere.
Chamberlayne said: “Sustainability has gained considerable traction in the US over the past months and investors across the world are becoming increasingly aware of the role the US will play in delivering a sustainable future.”
The fund will be available in a SICAV structure and is primarily aimed at investors in the EMEA and Asia Pacific markets.
Fidelity unveils climate solutions fund
6 September 2021
Fidelity International has launched a climate solutions equity fund investing in companies that reduce greenhouse gas emissions.
The Fidelity Funds – Sustainable Climate Solutions Fund is managed by Velislava Dimitrova and Cornelia Furse, who will invest in companies involved in the design, manufacture or sale of products or services in technologies or solutions such as electric vehicles, green hydrogen, autonomous vehicles, renewable energy, smart grids, industrial automation and agricultural efficiency.
Lead portfolio manager Dimitrov said: Climate change has prompted decarbonisation policies around the world to help achieve global carbon neutrality. The world needs to decarbonise urgently, at a faster pace that we have seen to date, and investors can play a major role in supporting this change.
“The decarbonisation challenge is on a scale unmatched in human history. But it is one that offers the companies meeting it a 30-year period of growth that surpasses even the internet revolution.”
Co-portfolio manager Furse added: “Unlike other climate funds, we focus on carbon reduction, not carbon avoidance. Investing in low emission sectors will not be enough to reverse 150 years of rising greenhouse gas emissions.
“The decarbonisation trend is currently at the early stage of penetration and will be driven by a combination of innovation, improving economics, accelerated governmental support and changing consumer behaviours. It is the stocks exposed to these themes that will drive superior investment opportunities for our investors.”
Liontrust launches sustainable multi-asset global fund
1 September 2021
Liontrust is launching a sustainable multi-asset fund aiming to invest in a cleaner, safer and healthier future.
The Liontrust GF Sustainable Future Multi-Asset Global Fund will launch on 13 October 2021 domiciled in Ireland and run by head of sustainable investment Peter Michaelis and fund manager Simon Clements.
The managers will use 21 investment themes to identify investable companies, aiming for 40% to 60% of the fund in equities, 20% to 50% in bonds and up to 20% in cash.
Michaelis said: “The equities and bonds of companies whose products and operations capitalise on the transformative changes that our process identifies will experience stronger growth and have better quality management than the market gives them credit for.
He added: “We are excited to bring this new multi-asset fund to our European clients, with an opportunity to seek strong returns while benefiting society.”
HANetf to list Europe’s first cleaner living ETF
31 August 2021
Investor Quickro, research company Tematica Research and HANetf have teamed up to launch a cleaner living ETF.
Thought to be Europe’s first cleaner living ETF, Cleaner Living ESG-S UCITS ETF will list on the London Stock Exchange, Xetra and Borsa Italiana in early September and be available for sale across Europe.
The ETF will target goods and services benefiting physical and mental health, including healthy food and personal care products, as well as also screening on sustainability areas such as human rights and labour practices.
A statement on the launch said: “While other investment strategies may focus on a specific aspect of the cleaner living theme, such as electric vehicles or organic foods, the Cleaner Living ESG-S UCITS ETF captures the accelerating growth across a much wider span of global trends, reducing its vulnerability to changes in public policy in any one area.”
Hector McNeil, co-founder and co-CEO at HANetf added: “It’s important we offer investors the opportunity to consider unique ETFs that may offer access to long-term, sustainable megatrends, and the ‘cleaner living’ theme is clearly a good addition to the investor’s tool kit and another market first for Quikro and HANetf.”
The tracks the Tematica Bita Cleaner Living Sustainability Screened Index, which accesses cleaner food and dining, cleaner health and beauty, cleaner building and infrastructure, cleaner transport, and cleaner energy. Companies in the index include Beyond Meat, Peloton Interactive and Tesla.
Omar ElKheshen, CEO of Quikro, said: “The craze towards cleaner living is not going away. It has become clear that this sentiment has led to a structural shift in our society, as opposed to a short-term fad, and companies are pivoting to capture the changing consumer spending profile through new products. Consumers are becoming much more knowledgeable about the products they are purchasing and making conscious choices towards a cleaner, sustainable lifestyle. Demand for cleaner products and solutions, be they beauty products, or the food that we eat, is evident in almost every aspect of everyday life – when at the supermarket when purchasing new appliances or vehicles.”
BlackRock launches ESG version of bond ETF
31 August 2021
BlackRock has launched an ESG version of its global aggregate bond ETF to meet client demand for sustainable products.
The iShares Global Aggregate Bond ESG UCITS ETF (AGGE) tracks the Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI Index and excludes issuers with an MSCI ESG rating lower than BBB, and sovereign and government bonds based on UN sanction lists. It says this gives it a universe of 20,000 securities compared with the Bloomberg index’s 27,000. It also aims hold at least 10% green bonds.
Brett Olson, head of fixed income iShares in EMEA for BlackRock said: “As the shift to sustainable investing continues to accelerate, we have seen strong demand – from across client segments – for a sustainable global aggregate exposure. Many investors transitioning their fixed income allocations are embracing indexing due to the diversification, transparency and efficiency that ETFs provide.”
|Share Class||TER||Index||Listing exchange||Ticker|
|iShares Global Aggregate Bond ESG UCITS ETF||10bps||Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI Index||Euronext||AGGE|
|iShares Global Aggregate Bond ESG UCITS ETF (NZD Hedged)||15bps||Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI Index||CBOE Europe||AGENZX|
|iShares Global Aggregate Bond ESG UCITS ETF (EUR Hedged)||10bps||Bloomberg MSCI Global Aggregate Sustainable and Green Bond SRI Index||Xetra||AEGE|
WisdomTree ETP to gain exposure to carbon emission allowances
27 August 2021
WisdomTree has unveiled a carbon ETP to gain exposure to carbon emission allowances.
The WisdomTree Carbon ETP reflects the price of the ICE Carbon Emission Allowances futures contract through the Solactive Carbon Emission Allowances Rolling Futures TR Index.
Carbon emissions are capped and under the European Union Emissions Trading Scheme (EU ETS) a fixed number of allowances are issued every year. The price of these allowances is increasing, which WisdomTree said could mean “higher investor involvement could therefore be seen as a positive market outcome”.
Nitesh Shah, director of research, Europe at WisdomTree said: “The EU ETS has firmly established itself as the pre-eminent model for a cap-and-trade carbon abatement system. Its success is seeing a material reduction in greenhouse gas emissions from the sectors and countries covered by the scheme. Futures based on the European carbon market are the most liquid in the world and present an investment opportunity for investors looking to contribute to price discovery in this vital market. Further investor involvement could boost the futures liquidity, continue to improve this market and further this cause.”
Alexis Marinof, head of Europe at WisdomTree added: “Climate change mitigation is front of mind for investors, corporates and policymakers alike, with many seeking to reduce their carbon footprint and align with the Paris Agreement. The importance of these initiatives cannot be understated and has driven demand for a vehicle that provides exposure to carbon emission allowances futures.”
Total EU carbon emission allowances trading activities were valued at more than €201bn in 2020, equivalent to 8,096 million tonnes of carbon dioxide, an increase of 19% from a year earlier.
Amundi launches ESG ETF in Asia
25 August 2021
Amundi has expanded its ESG ETF range with a new fossil free equity ETF in Asian emerging markets.
The Amundi Index MSCI EM Asia SRI – UCITS ETF is listed on Xetra and costs 0.25%. It aims to invest in Asia EM companied with high ESG ratings and exclude negative ESG screens.
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Fannie Wurtz, head of distribution and wealth division and head of Amundi ETF, indexing and smart beta, said: “We are convinced that ETFs play an important role in democratising ESG. With this latest addition to our range we are empowering all investors to cost-effectively integrate ESG in their portfolios.”
KGAL launches renewable energy impact fund
10 August 2021
German asset manager KGAL has launched its first renewable energy impact fund – KGAL ESPF 5 – which will be compliant with Article 9 under the Sustainable Finance Disclosure Regulation.
The fund will be available to institutional investors and responds, KGAL said, to increasing institutional demand for opportunities in renewables.
ESPF 5’s predecessor fund, ESPF 4, closed at the end of 2019 with €750m in equity commitments. According to the asset manager more than 90% of the fund’s capital is already committed.
Florian Martin, managing director and head of the firm’s client business, said: “We place huge importance on the decarbonisation of the European economy both from a corporate and an investment perspective.
“For example, based on our efforts to meet various climate change targets, our renewables portfolio supplied almost 1.7 million people with green energy by the end of 2020. And we will not stop there as we will continue to play our part to decarbonise society and ultimately protect our planet.”
The fund will invest in renewable energy such as photovoltaics, onshore and offshore wind power, and hydropower.
It will also consider other renewable energy generation and storage technologies as well as grid infrastructure.
The investment strategy will focus on the EU-27 and the European Free Trade Association member states. The aim is to achieve a target return (net internal rate of return) of 7-9% percent over its 10-year term.
Michael Ebner, managing director and head of sustainable infrastructure said: “The European investment market for renewable power generation offers immense growth and diversification potential.
“We are very well placed to take advantage of this opportunity based on our proven track record in renewables. We entered this space in 2003, which makes us one of the pioneers of the energy transition and have acquired over 150 photovoltaic plants, wind farms and hydroelectric power plants on behalf of our clients since then – and to date our total investments amount to more than €3.2bn across 10 European countries.”
Invesco brings solar energy ETF to Europe
5 August 2021
Invesco has launched a Ucits version of its solar energy ETF that will invest in global companies.
The Invesco Solar Energy UCITS ETF will increase the weighting to pure-play solar companies, and remove those earning less than a third of their total revenues from solar, or any from fossil fuels.
The ETF will track the MAC Global Solar Energy Index, which focuses on companies making most money from producing solar equipment, supplying the materials needed for solar or installing the systems themselves. Its ongoing charge is 0.69%.
Richard Asplund, managing director at MAC Solar Index, said the index has remained largely unchanged since launching in 2008 except for the emergence of some solar technologies, such as tracking systems, in the index now these have become cheaper.
He added: “We have been working with Invesco for 13 years and are excited it is bringing our solar index to investors in Europe.”
Chris Mellor, head of EMEA ETF equity and commodity product management at Invesco, said: “In following this index, our ETF will be investing in companies globally across the solar industry value chain but emphasising those with significant revenues from solar-related activities.”
AXA IM reshapes European fund into clean tech fund
3 August 2021
AXA Investment Managers has overhauled its Framlington European fund and rebadged it as a clean tech fund, a move which one commentator says could raise possible suitability concerns for existing investors.
The £63.8m European equities fund will be rebranded as the AXA ACT Framlington Clean Economy Fund and will be an onshore version of a global thematic equity strategy that has been running for three years.
Amanda O’Toole will take over as lead manager on the fund, creating a portfolio of 40 to 60 companies that operate across the clean economy, whose activities support the energy transition and the drive toward resource optimisation, waste and pollution reduction. O’Toole runs the existing offshore clean economy fund.
Axa Framlington European managers Hervé Mangin and Olivier Eugene remain with the business, with Mangin continuing to run the Axa WF Framlington Opportunities fund and Eugene stepping up to become head of climate in May.
Axa IM said the “official reshaping” of the fund forms part of its strategy to consolidate its UK fund range and offer clients more sustainably managed funds, following a surge in appetite for these strategies.
Around 256 funds were rebranded as sustainable in 2020, according to Morningstar, and in the first quarter of this year alone, the number was already at 127. However, fund buyers are concerned this could lead to further instances of greenwashing.
ESG credentials are important but so is suitability
Independent wealth expert Adrian Lowcock said the fact O’Toole has the suitable expertise to ensure the fund does what it says on the tin is important.
O’Toole will invest across four sub-themes that offer measurable, clean economy indicators, such as carbon dioxide emissions, water intensity and waste management and tackle several of the UN’s Sustainable Development Goals involving low carbon transport and natural resource preservation.
A “clean tech” thematic filter, built from quantitative and qualitative analysis, will whittle down global listed equities that have a positive environmental impact and adhere to AXA IM’s sectorial policies and ESG standards.
However, Lowcock said altering the mandate so dramatically could potentially create suitability issues.
“The fund’s objectives, investment style and market are all being changed to the point it will have little or no resemblance to the original. As such it is hard to see that it will be suitable for existing investors who bought the fund for exposure to European equities,” Lowcock said.
“Given there is always an issue with inactivity among investors this could leave some exposed to greater risk or unsuitable investments.”
“Although harder and more expensive, the fairer thing to do is launch a new fund and wind up the existing fund (if necessary) – that way no one is invested in the wrong strategy,” he added.
Rize unveils ETF investing in top impactful companies
23 July 2021
Rize ETFs has launched a product offering exposure to the top 100 most impactful companies in Europe.
The Rize Environmental Impact 100 UCITS ETF (LIFE) has been listed on the London Stock Exchange (LSE), Deutsche Börse Xetra, Borsa Italiana and the SIX Swiss Exchange today.
It was created in partnership with climate policy and sustainable investment specialist Sustainable Market Strategies (SMS), after the firms started to work together last year.
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They wanted to design and implement an environmentally-focused impact investment strategy aligned with the six environmental objectives set out in the EU Taxonomy. LIFE was created after the firms put together a methodology that deconstructs the six environmental objectives into a series of ‘high impact’ investment sub-sectors that the fund invests in.
Rahul Bhushan, co-founder of Rize ETF, explains: “What we have created here in partnership with SMS is an investment strategy and ETF that is purpose-built for taxonomy-aligned portfolios. The EU Taxonomy is incredibly thorough, and provides investors and companies with definitions around the type of economic activities that should be considered environmentally sustainable. We believe this[regulation] is a hugely constructive and positive first step for the asset management industry as we try to phase out greenwashing and vacuous value-signalling.
“Crucially, it also offers much greater clarity to companies as they seek to make their own green transition. LIFE is a simple and transparent way for investors to align themselves to the six environmental objectives set out in the EU Taxonomy with the knowledge that their is being used to back the technologies and solutions that will pave the way to a greener future.“
Félix Boudreault, chief sustainability officer at SMS, added: “We have created an ETF that does not just focus on carbon avoidance, or carbon mitigation, but one which seeks to identify the companies that are leaders and innovators in their respective environmental sub-sectors as per the EU Taxonomy. We are investing across the most cutting-edge technologies and solutions across clean water, EVs, renewables and hydrogen, energy efficiency, waste and the circular economy and nature-based solutions. We are excited about the strategy and look forward to having conversations with European investors.“
ASI launches three climate funds for net zero transition
23 July 2021
Aberdeen Standard Investments (ASI) has launched three Sicav funds in a range aimed at supporting the transition to net zero global carbon emissions.
All three funds that make up the ASI Climate Range comply with EU Sustainable Finance Disclosure Regulation (SFDR) article 9 and each focuses on a different area of the transition to net zero.
The Global Climate and Environment Equity Fund focuses on companies innovating and providing solutions to reach net zero, in particular solutions to the most carbon-intensive sectors.
The Climate Transition Bond Fund looks at leading emissions reducers – from high emission sectors and other sectors – and invests in projects that tackle physical impacts of climate change. It also invests in solutions providers supporting other parts of the economy to decarbonise.
The Multi-Asset Climate Opportunities Fund invests, via equities, bonds and renewable infrastructure, in climate solutions like clean energy, electric vehicles and smart working technologies.
Eva Cairns, ASI head of climate change strategy, said: “Climate change is one of the largest threats of our time and impacts not only future generations, but also many countries and companies around the globe today. Tackling it requires trillions of dollars of investment every year to transform our world into one that emits net zero greenhouse gases. This transformation comes with significant opportunities for investors.
“To have real world impact, we need to look to the future and invest in the solution providers and companies that will help make this transition to net zero happen.”
Lyxor and Bridgewater team up for sustainable fund
20 July 2021
Lyxor and Bridgewater have announced the launch of a UCITS multi-asset sustainability strategy named the Lyxor/Bridgewater All Weather Sustainability Fund.
It will use Bridgewater’s systematic research process to assess and select securities aligned to the United Nations Sustainable Development Goals (SDGs).
The fund is managed by Lyxor and sib-advised by Bridgewater.
Nathanael Benzaken, Lyxor’s chief client officer, commented: “Our clients’ appetite for sustainable investing has grown significantly in recent years, with investors seeking to combine financial and sustainability outcomes.”
Aviva adds Climate Transition Real Assets Fund
21 July 2021
Aviva Investors has expanded its climate transition range with a real assets fund.
Aimed at investor groups, including defined contribution (DC) schemes, it will provide clients with access to direct real estate, infrastructure and forestry assets helping to accelerate, and benefit from, the transition to a low-carbon economy. Areas of investment can include solar, onshore wind and the active decarbonisation of inefficient real estate assets.
The fund will aim to deliver a net annual return of approximately 8% per annum over rolling five-year periods, whilst targeting net zero by 2040 or sooner.
Daniel McHugh, CIO, real assets, at Aviva Investors, said: “One of our key objectives as a business is to ensure we are delivering the investment products and outcomes that our clients demand. As a committed investor, acting and supporting the transition to a low-carbon and climate-resilient world is not only consistent with our values, it is absolutely in line with what our clients now expect.
“There is a huge opportunity to drive our physical built environment toward net zero through Real Assets, where significant investment capital and firepower can make a direct and very material impact through increasing renewable energy, reducing emissions from the overall sector and removing carbon through nature-based solutions.”
BlackRock unveils EM impact bond
21 July 2021
BlackRock has brought to market an actively managed portfolio holding fixed income securities that are seeking a measurable social and environmental impact within emerging markets.
Categorised as Article 9 under SFDR, the Emerging Markets Impact Bond Fund will be available across Europe and invest in a portfolio of Green, Social and Sustainability (GSS) bonds issued by sovereign and corporate issuers operating in emerging markets.
The firm said the proceeds of GSS bonds held must be fully tied to green and social impact projects, for example in renewable energy, microfinance, ecologically sustainable food production and access to healthcare. A further 20% of the portfolio can be invested in non-GSS bond issuers with strong ESG characteristics that are aligned with the United Nations Sustainable Development Goals.
Rich Kushel, head of BlackRock’s portfolio management group, commented: “The events of the past year have had a profound social impact on emerging markets, which have been the economies hardest hit by the Covid-19 pandemic due to lower rates of vaccination. This is one of the first products with a clear focus on Green, Social and Sustainable bonds for these economies, where capital is needed to drive sustainable growth.
“While emerging market bonds are already a strategic asset class for investors, there is a growing consensus that focused green and social funding can play an important role in closing the gap to the targets laid out in the UN Sustainable Development Goals.”
Edentree launches multi-asset range to advisers
19 July 2021
Edentree has launched a risk-rated range of multi-asset portfolios investing within the group’s fund range.
Aimed at advisers in the UK, the EdenTree Responsible and Sustainable Multi-Asset Cautious, Balanced, and Growth funds will seek to deliver long-term capital growth through a diversified portfolio of assets able to withstand any market environment, taking a bottom-up approach to security selection.
The equity and fixed income allocations will be invested directly into EdenTree’s existing range of funds, while the alternative allocations will primarily be invested in listed infrastructure and real estate investment trusts.
They will be managed by Chris Hiorns, head of multi-asset and European equities, who is supported by new chief investment officer, Charlie Thomas, who joined the firm earlier this month.
Hiorns said: “Investors want their portfolios to make a difference and have a positive impact on society and the environment around them. Having launched one of the first ethical equity funds in the UK in 1988, we are not just participating in a fad. This launch demonstrates a continuation of our long-term dedication to performance with principles.”
Invesco launches high yield corporate bond ESG ETF
12 July 2021
Invesco has unveiled an ESG corporate bond ETF.
The Invesco USD High Yield Corporate Bond ESG UCITS ETF will track the Bloomberg Barclays MSCI USD High Yield Liquid Corporate ESG Weighted SRI Bond Index and exclude securities that have an MSCI ESG rating below BB or have no rating, have faced serious ESG controversies over the past three years or are involved in controversial activities. It also won’t invest in securities from emerging market issuers.
Paul Syms, head of EMEA ETF fixed income product management at Invesco, said: “If we start out looking at the broad asset class, we see the current environment could favour taking credit risk over duration for income investors wanting a pick-up in yield, particularly if inflation continues raising the prospects of Fed rate hikes. Strong economic recovery would also typically support risk assets such as high yield.
“The next consideration is on sustainability and the picture being painted by investor flows is vivid. In the first six months of the year, 73% of net flows into fixed income ETFs were into funds incorporating ESG filters.”
SSGA launches climate transition equity fund
8 July 2021
State Street Global Advisors (SSGA) has launched a climate transition equity fund with seed investment from Kempen Capital Management.
The World TPI Climate Transition Index Equity fund uses Transition Pathway Initiative (TPI) and FTSE Russell data to aid its investment decisions.
“As a supporter of the TPI, we are excited about this new fund, which offers investors a more sophisticated path to drive change than disinvesting from entire sectors and provides the opportunity to significantly improve their portfolio’s climate credentials,” said Carlo Funk, EMEA head of ESG investment strategy at SSGA.
“The use of TPI’s assessments means investors are encouraging companies, particularly those in the most carbon intensive sectors, to take action to plan and work towards aligning their businesses with the Paris Agreement.”
Nikesh Patel, head of investment strategy at Kempen Capital Management, added: “We are pleased to be the seed investor of this fund, which uses a new and exciting approach to assess the climate transition readiness and willingness of companies to be Paris-aligned.”
The UK-domiciled fund hopes to create more climate-conscious investment options for pension schemes and master trusts.
Alistair Byrne, head of UK institutional distribution at SSGA, said: “Pension schemes and master trusts in the UK are actively seeking means to gain exposure to the opportunities that companies can generate from the transition to a low-carbon economy. This fund offers an index-based solution within a life wrapper for pension funds seeking greater alignment to the goals of the Paris Agreement, enabling them to immediately improve their portfolio’s carbon profile and reduce climate risk, while maintaining target returns.”
Nordea global strategy to address climate and social impact
6 July 2021
Nordea Asset Management has launched a thematic global ESG strategy.
The Global Climate and Social Impact strategy is classified Article 9 under SFDR and looks for investments to aid the transition towards and inclusive green economy.
Thomas Sørensen, co-manager of Nordea’s Global Climate and Social Impact strategy, said: “The climate crisis is an issue demanding our attention, yet there is also a fundamental need to address the social issues facing society today. Companies that offer solutions to these problems represent a compelling proposition for investors. New consumers care not only about what the products are made of, but how they are made. That’s why we look for companies that marry purpose and profits.”
HANetf and Saturna Capital launch sustainable ETF
5 July 2021
Saturna Capital and HANetf have launched a carbon offsetting sustainable ETF.
The Saturna Sustainable ESG Equity HANzero™ UCITS ETF will follow the same investment strategy as Saturna’s US-based sustainable equity mutual fund that launched in 2015 and is run by the same managers, Jane Carten and Scott Klimo.
HANetf’s carbon offsetting brand is known as ‘HANzero™’ and will work in conjunction with carbon offset specialists, South Pole, to directly neutralise the carbon emissions of their investments through projects such as Topaiyo Forest Conservation in Papua New Guinea and the Musi River Hydro Plant in Sumatra, Indonesia. It is classified as Article 8 under the SFDR.
Hector McNeil, co-CEO of HANetf, said: “Active ETF assets are currently small given the size of the overall industry, but growth is strong. ETFGI recently reported that assets invested across active EFTs and ETPs had reached a record $329 by the end of Q1 this year.
The well-recognised advantages of ETFs – intra-day trading, shortability, lendability, having an ETF portfolio held in one venue, portability of positions between trading venues, low entry costs and diversification – are becoming more prevalent. This gives investors the option to gain exposure to the same active investment strategies they already own via an ETF wrapper. It’s time to bring these benefits to the active management space, creating more choice and more opportunity for both institutional and retail investors.”
BlackRock unveils multi-strategy ESG fund in Europe and announces ESG indexes for five funds
5 July 2021
BlackRock has launched its first multi-strategy ESG fund in Europe, aiming to offer more balanced returns.
The Systematic Multi-Strategy ESG Screened Fund is categorised as Article 8 under the Sustainable Finance Disclosure Regulation and marks a move for the firm into Europe with this strategy, which it says is its first single-manager multi-strategy liquid alternatives UCITS fund with daily liquidity in Europe.
It uses a three-pronged approach to create more consistent returns for those who want more equity diversification but also lower yields than those currently offered by more traditional bonds. This approach includes directional asset allocation, a macro view and driving defensive returns by applying credit expertise to equity selection.
An ESG framework screening out issuers involved with controversial weapons, oil sands, thermal coal, tobacco and civilian firearms sectors, along with issuers in violation of the UN Global Compact, is then applied across all three approaches.
“The ongoing macro environment of low yields and rising inflation has forced investors to re-think the role of fixed income across portfolios as the return and diversification benefits have become more challenged,” said Jeff Rosenberg, senior portfolio manager of the fund.
“This fund can be a solution for investors to tackle these macro and portfolio construction headwinds as it helps to add alternative sources of portfolio diversification and resilience.”
Meanwhile BlackRock will now be using ESG indexes for five of its tracker funds due to client demand and regulatory pressure.
|Fund||Existing index||New index|
|ACS World ex UK Equity Tracker Fund||FTSE All World Developed ex UK Index||FTSE Developed ex UK Custom ESG Screened Index|
|ACS UK Equity Tracker Fund||FTSE All-Share Index||FTSE All-Share Custom ESG Screened Index|
|ACS US Equity Tracker Fund||FTSE USA Index||FTSE USA Custom ESG Screened Index|
|ACS Continental European Equity Tracker Fund||FTSE All-World Developed Europe ex-UK Index||FTSE Developed Europe ex UK Custom ESG Screened Index|
|ACS Japan Equity Tracker Fund||FTSE All-World Japan Index||FTSE Japan Custom ESG Screened Index|
The ESG screens will reduce exposure to companies that have business lines or sources of revenue from controversial weapons; small firearms; thermal coal; and oil sands, as well as companies severely violating United Nations Global Compact principles.
Tim Hodgson, head of the UK DC platforms and retirement solutions at BlackRock, said: “From working with our clients, we know that exclusionary screens that avoid exposure to certain companies or sectors are an important part of the ESG toolkit. While pension schemes’ members continue to seek investments that reflect their values on climate change and social issues, scheme trustees are also being asked to consider ESG factors to meet new regulatory requirements.”
J.P. Morgan launches three sustainable OEICs
30 June 2021
J.P. Morgan Asset Management (JPMAM) has launched three sustainable OEICs, including a thematic climate change fund.
Climate Change Solutions will invest in 50-100 early-stage, small and mid-cap companies producing clean energy such as wind, solar, or hydro, less carbon-intensive forms of agriculture or construction, sustainable transport and waste reduction.
It will use JPMAM’s proprietary natural language processing tool, ThemeBot, to screen nearly 13,000 stocks globally, and will be managed by Francesco Conte, Yazann Romahi and Sara Bellenda.
Dale Erdei, head of UK funds at JPMAM, said: “We’re delighted to be growing our sustainable offering in the UK market and particularly excited to be launching a thematic portfolio that has a differentiated approach. The Climate Change Solutions fund is designed to help investors intelligently capture innovative investment opportunities and technologies facilitating the low carbon transition.”
The C-share class of Climate Change Solutions Fund will have a Total Expense Ratio (TER) of 70 basis points.
The other two new funds are the JPM UK Sustainable Equity Fund (OEIC) and JPM Global Sustainable Equity Fund (OEIC), which will both use exclusion policies.
JPM UK Sustainable Equity will be managed by Anthony Lynch, Callum Abbot and Alexandra Sentuc; the fund’s C-share class will have a TER of 75 basis points. JPM Global Sustainable Equity will be managed by Timothy Woodhouse, Joanna Crompton and Sophie Wright; the fund’s C-share class will have a TER of 70 basis points.
HANetf to list Europe’s first ESG gold mining ETF
29 June 2021
HANetf will list Europe’s first ESG gold mining ETF on the London Stock Exchange in July.
The firm hopes AuAg ESG Gold Mining UCITS ETF, created in partnership with AuAg Funds, will allow ESG investors to access gold mining by offering exposure to 25 ESG-screened miners.
The ETF tracks the Solactive AuAg Gold Mining Index, which ranks gold miners for ESG characteristics and excludes all but the 25 best-in-class ESG risk companies in the sector. Independent ESG screening is provided by Sustainalytics.
The fund is equally weighted, with each holding having an allocation of 4% to help avoid the risk of concentration in larger miners. The fund’s total expense ratio is 0.60%.
Eric Strand, CEO at AuAg Funds and founder of the AuAg ESG Gold Mining UCITS ETF said: “Mining is an industry that has seen vast improvements in all aspects of ESG, but standards vary across regions and companies. [The fund] helps investors get exposure towards gold mining companies with the best ESG credentials and invest in the sector more responsibly.”
Hector McNeil, co-Founder and co-CEO at HANetf, added: “There is also a strong investment story to tell when investing in ESG friendly gold miners which is a growth sector partly due to monetary inflation and the green transformation.”
Wells Fargo’s new strategy looks to decarbonise
29 June 2021
Wells Fargo Asset Management (WFAM) has launched a climate transition strategy aiming to help investors debarbonise.
Climate Transition Global Investment Grade Credit has a goal of decarbonising by 2050 or earlier and is already being used by national pension provider Nest.
It will be managed by Scott Smith, head of multi-sector investment grade, and Henrietta Pacquement, head of investment grade credit Europe.
Deirdre Flood, head of international client group, said: “We must collectively decarbonise the economy to manage climate change in a responsible way. We can invest deliberately to advance this profound transition.”
Diandra Soobiah, head of responsible investment at Nest, said: “The strategy provides us with a robust and measurable framework to decarbonise over time and support the climate transition, helping us to align our portfolio with our net-zero ambitions. It’s important fund managers take the risks of climate change seriously. Our members are likely to be significantly impacted if climate change isn’t addressed, with a strong chance of lower returns at retirement. We commend WFAM for showing leadership in addressing climate-related risks and opportunities in fixed income, enabling us to continue to meet our financial objectives in this asset class.”
BNP Paribas introduces Article 9 low carbon ETF
29 June 2021
BNP Paribas Asset Management has launched a new low carbon thematic ETF that has been classified by the Sustainable Finance Disclosure Regulation as Article 9.
BNP Paribas Easy Low Carbon 300 World PAB UCITS ETF replicates the Low Carbon 300 World PAB index. Administered by Euronext, the Paris-aligned index consists of 300 best-in-class international companies, notably industry leaders in reducing CO₂ emissions. Among the 300 index constituents is a 15% allocation to ‘green’ companies, selected by a committee of experts, which generate at least half their revenue from renewable energy or the development of low carbon technologies.
Isabelle Bourcier, head of quantitative and index management at BNP Paribas said: “The increasing awareness of climate issues among savers, coupled with regulatory changes, is generating high expectations on their part, which is why we have chosen to expand the geographical exposure of our low carbon index offering internationally.”
Morgan Stanley’s new sustainable OEIC target net zero by 2050
29 June 2021
Morgan Stanley Investment Management (MSIM) has launched a global sustainable OEIC with a 2050 net-zero goal.
The Morgan Stanley OEIC Global Balanced Sustainable Fund will invest in companies that contribute to a low-carbon economy, with the goal to decarbonise the portfolio’s core equity exposures according to a 1.5°C scenario, targeting net zero by 2050.
Andrew Harmstone, head of the global balanced risk control strategy at MSIM said: “Through the Global Balanced Sustainable Fund, we have also sought to positively impact society by targeting investments with the explicit intention of generating a measurable positive environmental and social impact, aligned with 11 of the UN SDGs, a focus on decarbonisation and an effective engagement approach to deliver value to our stakeholders.”
Mirabaud unveils climate bond fund
28 June 2021
Mirabaud Asset Management has launched a climate bond fund.
The Mirabaud Global Climate Bond fund targets global issuers with strong commitments to emissions reduction and carbon neutrality and will invest in climate-related and low-carbon green bonds.
It is benchmarked against the Barclays Global Aggregate Bond Index, and the portfolio itself will maintain a weighted average temperature of sub 2°C and net zero in line with the Paris Agreement targets.
The fund is managed by Andrew Lake, Mirabaud Asset Management’s head of fixed income, and Fatima Luis, senior fixed income portfolio manager.
Lake said: “The warming of our planet, which is already on an unsustainable path, will have a significant impact upon our environment, economies, health, and future. As investors, we have a responsibility to future generations and to our planet to make sure that companies and countries adhere to high levels of environmental governance and climate reduction targets. This may sound dramatic, but the choice really is that stark.”
M&G add Paris Agreement criteria to two funds
28 June 2021
M&G is aligning two equity funds with the Paris Agreement goals on climate change, as part of its plans to achieve net zero carbon emission across its investments portfolios by 2050.
The M&G Global Select and M&G Pan European Select strategies, both managed by John William Olsen, will have additional criteria so that holdings will either be:
- Low Carbon Companies with a weighted average carbon intensity lower than 50% of that of each Fund’s respective benchmark
- Reducing Carbon Companies committed to having in place science-based targets to reach net zero by 2050 (SBTi)
After the proposed changes are implemented, the overall weighted average carbon intensity of the portfolios will typically be more than 50% below that of their benchmark average, while manager Olsen said he expects over 90% of companies in the portfolios will have science based targets in place by 2025.
Reflecting the changes, which will be effective from 31 August 2021, subject to shareholder approval, the funds will be renamed M&G Global Sustain Paris Aligned and M&G European Sustain Paris Aligned, respectively.
Furthermore, M&G is also proposing to limit the Pan European Select strategy’s universe to continental Europe, excluding the UK, to better reflect UK clients’ preferences when approaching UK and European equity investing.
Olsen commented: “Climate change is arguably the greatest challenge of our time and achieving the Paris climate deal’s objectives is of foremost importance. The changes we are announcing today aim to contribute to this goal and to deliver, we will drive even greater engagement with our investee companies. Active engagement is a key feature of our investment philosophy as active managers, one crucial to achieve real positive change.”
ETF offering carbon offsetting joins European market
28 June 2021
HANetf has launched a clean energy product, which it says allows investors to neutralise their investment carbon footprint in one single trade.
Listing on the London Stock Exchange and available across Europe, the HANetf S&P Global Clean Energy Select HANzero UCITS ETF will use S&P’s Carbon to Value Invested (Metric Tons CO2 per $1m invested) data to calculate a daily accrual of the portfolio’s carbon impact, which will then be offset with certificated climate-positive projects selected with carbon offset specialists, South Pole.
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The offset programmes, linked to the UN’s Sustainable Development Goals, will be paid for within the TER of the ETF and HANetf said it hopes to apply the HANzero process to future launches.
Nik Bienkowski, co-founder and co-CEO at HANetf, said: “Environmentally conscious investors can now target capital growth with the HANetf S&P Global Clean Energy Select HANzeroUCITS ETF, ZERO, safe in the knowledge that any carbon emissions linked to their investment will be offset in some exciting global climate positive projects with our partners at South Pole.
“HANetf is deeply concerned about climate change and want to be able to offer products to environmentally focused investors. That’s why we have created the first ETF in Europe with the ability to offset carbon. Investors are demanding action from their investment providers, and we are delivering new and innovative ESG features such as the carbon offset under our trademark HANzero.”
BlackRock launches future consumer fund
28 June 2021
BlackRock has launched two new thematic, active equities products with one focusing on sustainability and climate impact in the consumer industry.
The BlackRock Global Funds (BGF) Future Consumer Fund invests in a concentrated portfolio of companies driving the transformation of the consumer ecosystem globally. The group said it will capitalise on a diverse range of consumer themes including changes in consumption patterns, evolution of entertainment and personal wellbeing development.
It will also focus on companies that are reducing their carbon intensity within the consumer ecosystem and is categorised as an Article 8 fund under SFDR.
It is launched alongside the BGF Next Generation Health Care Fund offering cross-regional exposure to companies driving growth and innovation in solutions to healthcare challenges.
New emerging themes are reflected in the portfolio such as genetic medicine, next generation diagnostics, immunotherapy, robotic-assisted surgery, biosensors & trackers, medical AI applications, and telehealth.
Evy Hambro, global head of thematic and sector based investing at BlackRock, said: “There are currently profound shifts occurring in the healthcare space, as well as in the way people consume goods and services globally. On the one hand, technology is enabling a wealth of innovative companies to address emerging health concerns, creating secular growth opportunities for investors. On the other, demographics and the way consumers interact with brands are propelling changes in consumption patterns and preferences, as sustainability considerations come to the fore. Both funds encapsulate these fast-growing themes and expand our thematic offering to cover the latest megatrends developments we’re witnessing in a post-pandemic world.”
Rathbone sustainability fund renamed
25 June 2021
Rathbone Unit Trust Management has rebranded its Global Sustainability Fund to incorporate its sister division Greenbank as this better reflects the collaborative management of the fund.
The fund is run by Rathbone Unit Trust Management, with David Harrison as lead manager, while specialist ESI investment research is provided by Rathbone Greenbank Investments, which sits under Rathbone Investment Management.
Ahead of its three-year anniversary, the fund’s new name is the Rathbone Greenbank Global Sustainability Fund.
SSGA unveils climate bond fund range
25 June 2021
State Street Global Advisors (SSGA) has announced the addition of a climate bond fund range with a Finnish pension insurance company seeding $275m in the three new funds.
The range aims to support investors looking to reduce their exposure to carbon emissions and fossil fuel, while also The trio of funds will invest in US, euro and global corporate bonds using an approach that assesses climate impact and excludes controversial issuers.
Carlo Funk, EMEA head of ESG investment strategy at SSGA, said: “This new Sustainable Climate fund range enables investors to manage climate risks in their core corporate bond allocations and increase their exposure to green bonds and companies aligned with the transition, while keeping close to the index returns.”
Varma Mutual Pension Insurance Company, an earnings-related pension insurance company in Finland, are investing a total of $275m in the new funds.
Fidelity adds trio of multi-asset products to sustainable range
11 June 2021
Fidelity International has expanded its cross asset Sustainable Family of Funds with three OEICs – the Fidelity Sustainable Multi Asset Conservative Fund, Fidelity Sustainable Multi Asset Balanced Fund and Fidelity Sustainable Multi Asset Growth Fund.
Targeting the UK adviser market, they will invest primarily in strategies drawn from the Sustainable Family of Funds, and maintain a minimum of 70% of net assets invested in securities deemed to have sustainable characteristics.
The risk-rated range aim to deliver capital growth over the long term with the lower risk funds having greater exposure to fixed income, and moving up the risk spectrum, each fund will take on a greater allocation towards growth assets such as global and emerging market equities.
Managed by Fidelity’s solutions and multi-asset team, with Nick Peters as lead portfolio manager and Ayesha Akbar as co-portfolio manager.
John Clougherty, head of UK wholesale at Fidelity International, said: “With increased regulation and growing client demand, we recognise the importance to the UK adviser market of building sustainability considerations into suitability assessments and their fund section process.
“For those clients who require an enhanced ESG screening, we are pleased to offer a growing selection of funds in our Sustainable Family of Funds spanning our equity, fixed income, ETF and now multi asset franchises, providing a wide ranging but universal and robust approach to sustainable investing.”
The funds carry an OCF of 0.5%.
Vontobel recruits from Federated Hermes for impact launch
Vontobel has hired a new manager to run a global impact equity fund.
10 June 2021
Elena Tedesco is joining as portfolio manage from Federated Hermes, where she was the co-portfolio manager for the global emerging markets ESG strategies and director of sustainability for the global emerging markets team.
Joining Vontobel’s listed impact team, she will run the newly launched Global Impact Equities strategy, domiciled in Luxembourg which seeks a “double dividend” for investors by investing in companies, which contribute to the advancement of the United Nations Sustainable Development Goals (SDGs). It will also target companies that are helping to address critical challenges such as pollution and climate change, resource scarcity, food distribution, population growth, insufficient healthcare, rising inequalities, financial exclusion and illiteracy.
These will sit across eight investable areas: four focusing on companies that work towards a better environment, such as clean energy, clean water, sustainable cities and innovative industry and technology, and the remaining four areas pertain to societal change: good health and wellbeing, sustainable food, responsible consumption and equal opportunities.
Under Sustainable Financial Disclosure Regulations (SFDR), which launched across Europe in March to categorise responsible investment vehicles, the fund qualifies under Article 9.
Incoming manager Tedesco said: “The increasing demand for innovative solutions that contribute to a better environment and societal change will lead to market share gains, pricing power and rising stock prices. Moreover, such companies are less exposed to tightening regulation than their competitors. We are committed to creating real and tangible change through this positive impact fund, including continued engagement with companies on the most pressing societal and environmental issues.”
Before joining Federated Hermes, Tedesco was an analyst at Deminor, a Belgium-based independent research boutique. She has a 20-year career history covering integrating sustainability in fundamental equity analysis and engagement, and was responsible for developing the investment approach to sustainability and ESG issues for Federated Hermes’ emerging markets equity strategies.
Dan Scott, head of impact and thematics, commented: “Elena is well-known in the industry as an expert on sustainability and has been at the vanguard of ESG for the last two decades. Her strong background and experience in broader ESG issues as well as specifically in impact investing will play a key role in further strengthening Vontobel’s expertise in the impact space to generate value for our clients.”
The institutional share class of the Global Impact Equities Fund carries a fee of 0.83%.
Thematics launches wellness fund
10 June 2021
Natixis-owned Thematics Asset Management is expanding its product range with a fund focused on physical and mental wellbeing.
The Thematic Wellness Fund will be run by Marine Dubrac, who joins the firms from Candriam, and co-portfolio manager Pierre-Alexis François.
Its aim is to invest in companies that provide products, services and technologies to individual consumers proactively seeking to ensure their long-term physical and mental wellbeing, to support the third United Nations Sustainability Development Goal (SDG): to ensure healthy lives and promote well-being for all at all ages.
Mohammed Amor, CEO of Thematics Asset Management, commented: “Individuals are increasingly focused on being healthy in body and mind, a long-term trend that we anticipated some time ago and that has rapidly accelerated due to the global health pandemic. The stakes are high. We all need to play along.”
The portfolio of global companies will be grouped into three categories based on the end market applications of the relevant product, service or technology: prevent, monitor and improve. The portfolio will hold between 40 to 60 high conviction stocks.
Under Sustainable Financial Disclosure Regulations (SFDR), which launched across Europe in March to categorise responsible investment vehicles, the fund qualifies under Article 9.
Whitechurch unveils low-cost responsible portfolios
9 June 2021
Whitechurch Securities has launched a range of low-cost responsible portfolios, reports ESG Clarity sister title Portfolio Adviser.
The Responsible Dynamic portfolios cover a range of risk profiles from low-risk defensive through to more aggressive strategies.
They will invest in a range of exchange traded funds and trackers with up to 30% in active funds.
The portfolios have an annual management charge of 0.2% and will be available direct and on a range of platforms.
See also: Advisers urged to look beyond headline cost as MPS price war intensifies
Whitechurch investment director Amanda Tovey said: “While historically passive funds in the ESG space have had a lot of bad press, in recent years a lot of work has been done in this space to improve the offering and we feel now is the right time to launch a competitively priced passive solution.”
The range comes in addition to the Whitechurch Prestige Ethical range which has a five-year track record.
It comes at a time when a growing number of asset managers, including Schroders and Legal & General Investment Management, are launching their own low-cost model portfolio services that lean heavily on passive strategies.
Gresham House launches forestry fund
7 June 2021
Alternatives asset manager Gresham House has launched a forestry fund investing in the creation of new woodland and the protection of existing forests.
The Gresham House Forest Growth & Sustainability strategy aims to generate returns through the sale of timber and the capital growth of land and trees from existing forests. Meanwhile, the creation of more than 10,000 hectares of new woodland captures carbon and generates carbon credits, which investors will receive.
See also: – Green Dream with Gresham House CEO: We have more resources and more ambition
Anthony Crosbie Dawson, director of forestry and private clients said: “The merits of this strategy for investors are numerous. By combining exposure to commercial forestry and carbon sequestration, this strategy offers an opportunity to benefit from capital growth and income generation, whilst meaningfully combatting climate change. Additionally, sustainable forestry offers protection against mounting inflationary pressures, alongside strong portfolio diversification due to its uncorrelated returns.
“By increasing the UK’s forestry stock, we are also contributing to the UK’s natural capital, enhancing the country’s climate, biodiversity and flood mitigation.”
Heather Fleming, managing director, institutional business at Gresham House, added: “This new strategy launch represents a natural extension of Gresham House’s longstanding expertise managing commercial forestry assets. We expect to see strong interest in this sustainable solution that combines existing commercial forestry and woodland creation, as demand for ESG investments and carbon credits continues to contribute to rising forestry valuations. The flexibility of being able to retain the carbon credits for insetting or selling them for income provides investors optionality dependent on their carbon footprint and return requirements.”
Nuveen invests in ESG leaders in new impact bond fund
7 June 2021
Nuveen has launched a Global Core Impact Bond fund.
Co-managed by head of ESG/impact – global fixed income Stephen Liberatore, head of international and emerging markets debt Anupam Damani and co-portfolio manager for the existing ESG/impact fixed income accounts Jessica Zarzycki, the fund will use Nuveen’s proprietary public fixed income impact framework, including transparent use of proceeds and annual disclosure of measurable outcomes, to ensure positive impact.
It will direct capital towards affordable housing, community and economic development, renewable energy and climate change, and natural resources. And will allocate up to 40% in emerging markets and 15% in high yield, at the managers’ discretion. It will launch with $25m seed capital.
Liberatore said: “Significant investment is needed to combat some of the key issues our society faces, including climate change, global inequality and chronic housing shortages across the world. Yet the perception – an inherently false one – is that impact objectives either require a performance sacrifice or can be pursued only through private strategies.
“We firmly believe public markets, and in particular the fixed income space given its size, can offer investors attractive risk-adjusted returns, while ensuring they have a measurable societal and environmental impact.”
Alex Prout, head of global client relationships, added: “The global pandemic has brought to the fore the need to tackle social and environmental issues head on. In response, we are seeing increasing demand from our clients for investment solutions that offer both returns and tangible impact. We can make real progress in areas such as affordable housing and community development, by investing in a range of public fixed income sectors where proceeds can be tied to specific projects or initiatives or are used to fund entities fully engaged in such efforts. This appeals to clients globally, as they seek to align their investments to specific outcomes.”
The fund is available to investors based in Denmark, Netherlands, Switzerland, Germany, the UK and Italy.
BNP Paribas launches Ecosystem Restoration Fund
7 June 2021
BNP Paribas has launched an Ecosystem Restoration Fund that allows investors to access organisations that aim to restore and preserve global ecosystems and capital.
The firm said there is a desperate need to protect natural capital and an investment of $22trn over the next decade will be required to restore this. Thematic investing has previously been more concerned with areas such as renewable energy, but now, natural capital is being recognised globally as one of the most crucial elements of addressing the climate change issue.
See also: – New benchmark to ‘root out impact-washing’ finds room for improvement
Targeting six of the UN Sustainable Development Goals, BNP Paribas Ecosystem Restoration will focus on three themes:
- Aquatic ecosystems
- Terrestrial ecosystems
- Urban Ecosystems
Together with integrated ESG criteria, the fund combines macro and fundamental research in order to identify “best-in-class companies”. Launched in response to increasing demand from clients, it includes research aimed as accelerating development of “biodiversity measurement indicators”.
Edward Lees, co-manager of BNP Paribas Ecosystem Restoration, said: “Half the world’s GDP is dependent on natural capital and our consumption of it is 1.75 times faster than the earth can generate.”
Stonehage Fleming adds standalone equity fund to global sustainable portfolios
25 May 2021
Stonehage Fleming Investment Management has added a global sustainable equity fund to its global sustainable investment portfolios.
The Global Sustainable Equity Fund will mirror the process for equities in the sustainable portfolios, where the firm sees opportunities as we approach COP26 in November.
Graham Wainer, CEO and head of investments at Stonehage Fleming Investment Management, said: “We made the decision that this, our first standalone sustainable investment fund, should be focused solely on equity investments as we see them as the key drivers of return.
“Our equity investments can tackle a breadth of issues, including building back from Covid-19 and helping to address the majority of the UN’s Sustainable Development Goals. We can also measure and report the impact that our clients’ investments make towards creating a sustainable planet and society.”
The family office launched its global sustainable portfolios back in 2019. At the time it said it constructs portfolios by selecting funds from across the industry, blending manager skills to meet a variety of risk-return objectives, and that the resulting asset allocation and risk-adjusted targets would be very similar to its mainstream portfolios.
However, it added the overlap in funds between its sustainable and existing portfolios is very low, as the fund managers are required to overcome different and demanding hurdles, such as their approach to governance and impact methodologies.
Vanguard adds second fund to ESG ETF range
25 May 2021
Vanguard has added a second fund to its ESG ETF range within a matter of months as it continues to play catch-up with passive rivals on the responsible investing front.
The Vanguard ESG Global Corporate Bond Ucits ETF will track the Bloomberg Barclays MSCI Global Corporate Float-Adjusted Liquid Bond Index, which has been screened to exclude companies involved in weapons, non-renewable energy, GMOs and vice products like adult entertainment, gambling, alcohol and tobacco.
Issuers with “very severe ESG controversies” or “red flags” as defined by the UN Global Compact Principle have also been removed.
The fund is meant to serve as a “core building block for ESG-aware portfolios” by providing “broad diversification while incorporating robust screening based on ESG criteria,” according to a press release announcing the launch.
It takes the total of Vanguard’s ESG trackers to six and marks the first fixed income product in its responsible investment stable.
Vanguard has been ramping up efforts to boost its ESG ETF offering after years of trailing behind other passive giants, including its biggest rival Blackrock.
In the past 12 months it has rolled out five funds, including the recently launched Vanguard ESG Global All Cap Ucits ETF, to sit alongside its existing SRI European Stock fund launched over a decade ago.
Despite its recent fund launches the $7.5trn asset manger’s commitment to ESG has been described as “low” by Morningstar, and its voting record continues to be called into question.
A recent report from nonprofit company As You Sow revealed Vanguard, as well as Blackrock, T Rowe Price and State Street, voted in favour of management resolutions more often when they had business ties for financial services.
Vanguard head of ESG strategy, UK and Europe, Fong Yee Chan said: “Vanguard continues to seek ways to deliver long-term ESG strategies to give value to investors. For those investors wishing to mitigate ESG risk or avoid companies that don’t align with their values, we are pleased to offer access to an ESG global corporate bond strategy through the new Vanguard ESG Global Corporate Bond Ucits ETF.”
The ETF will be managed by Vanguard’s 57-strong fixed income group, which manages more than $1.7trn assets globally.
With an ongoing charges figure (OCF) of 0.15% it is the second cheapest ESG fund in the passive giant’s stable, behind the SRI European Stock fund, which has an OCF of 0.14%.
UBS launches Future of Earth fund
25 May 2021
UBS Global Wealth Management (GWM) has launched a new thematic equity fund aiming to address environmental issues.
The Multi Managers Access II – Future of Earth fund, which will invest in small, medium and large-caps in global developed and emerging markets, is aligned to the SDGs and focuses onfour themes: people, health, communities; sustainable energy; land; and water. Each theme is tackled by a different portfolio manager: Allianz Global Investors, Pictet Asset Management, Polar Capital, and Robeco. Each will be benchmarked against a specific MSCI thematic index.
UBS GWM’s other thematic funds are Digital Transformation Dynamic, Digital Transformation Themes, and Future of Humans funds, which were made available to investors in 2020.
Bruno Marxer, head of global investment management, said: “In an environment of rising bond yields and increased volatility, we see an opportunity for investors looking to position for structural growth. This fund allows us and our clients to harness the power of investing towards preserving our planet for the next generation and gaining exposure to the sectors set to lead the way.”
The Multi Manager Access II – Future of Earth fund is available in jurisdictions including Austria, Belgium, Denmark, Finland, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, and the UK.
Columbia Threadneedle adds two equity funds to sustainable range
20 May 2021
Columbia Threadneedle Investments has added two new sustainable funds to its Sustainable Outcomes range.
The Columbia Threadneedle (Lux) Sustainable Outcomes Global Equity fund and the Columbia Threadneedle (Lux) Sustainable Outcomes Pan-European Equity fund focus on themes drawn from the SDGs and are assessed by the firm’s own responsible investment ratings.
Pauline Grange, portfolio manager of the Columbia Threadneedle (Lux) Sustainable Outcomes Global Equity fund, said: “As active investors, we encourage firms to adjust practices and innovate for solutions – not just to manage ESG risk, but to also create opportunities to deliver positive change aligned to the SDGs. Importantly, those companies must be consciously thinking about, and acting on their impact.”
The strategy underlying the Columbia Threadneedle (Lux) Sustainable Outcomes Global Equity has already been running as a separate strategy for institutional clients.
Andrea Carzana, portfolio manager of the Columbia Threadneedle (Lux) Sustainable Outcomes Pan-European Equity fund, said: “Investor demand for sustainable equities is a structural shift supported by governments and society to address environmental and social issues. Companies are on the path to more sustainable governance, operations and products. We will direct capital to those companies with the strategy, will and potential to enable these shifts.”
Aviva Investors unveils climate transition credit fund
13 May 2021
Aviva Investors has launched a global credit fund investing in companies offering goods and services for climate change mitigation.
With a $350m capital allocation from the firm’s UK multi-asset range and the Aviva Ireland multi-asset portfolio, the Climate Transition Global Credit Fund will back companies the team identifies as best placed to transition to a warmer, lower carbon world.
The fund will be co-managed by portfolio managers Tom Chinery and Justine Vroman and climate specialist Rick Stathers.
It is aligned with the UN’s Sustainable Development Goals, excludes fossil fuel companies and and targets solutions providers that generate current or future material revenue by addressing climate-related themes, such as the shift to renewable energy sources, sustainable transport and more environmentally-conscious lending.
The firm said it also aims to capture transition-oriented companies with low decarbonisation and physical impact risk, extending the investment universe beyond businesses with obvious green credentials.
It will be predominantly exposed to investment grade companies with a small allocation of up to 5% in high yield bonds, and benchmarked against Bloomberg Barclays Global Aggregate Corporates Index.
Colin Purdie, CIO for credit at Aviva Investors, commented: “We can’t pivot to a lower carbon world if all we do is rule out the poor performers and only invest in companies that provide solutions to climate change. All companies need to adjust for a warmer, lower carbon world, which is why we felt it was important to use a wider transition lens to capture a larger set of businesses beyond those with obvious green credentials.
“As investors, it is our responsibility to look beyond small pockets of green finance to engage and mobilise the liquidity of the wider credit market to assist in climate transition and the achievement of net zero carbon emissions. Companies that don’t adjust their business models will be less attractive to investors and will present a less compelling investment case over time. Climate laggards may find that their financing becomes more expensive than that available to climate leaders.”
Aquila Energy Efficiency Trust seeking £150m for IPO
15 May 2021
An investment trust investing in a portfolio of energy efficiency projects in the Europe and the UK has been slated for launch in June, listed on the London Stock Exchange.
The Aquila Energy Efficiency Trust is seeking to raise £150m ahead of its IPO which will be deployed into companies exposed to energy efficient lighting, smart building and metering services, cogeneration plants, heating, ventilation and air conditioning (HVAC) systems, efficient boilers, solar photo voltaic plants batteries, other energy storage solutions, electric vehicles and associated charging infrastructure.
With Aquila Capital acing as the investment adviser, the trust will not invest in fossil fuel extraction or mineral extraction projects with investments overall aiming to seek to reduce primary energy consumption, reduce CO2 emissions and in many cases deliver economic savings and other benefits to the counterparties including improved air quality, a statement said.
Companies of up to €10m market cap will make up the majority of the portfolio but larger investments may be made where possible.
Commenting on the launch, Chair of Aquila Energy Efficiency Trust PLC, Miriam Greenwood, said: “It gives me great pleasure to announce Aquila Energy Efficiency Trust’s intention to float on the London Stock Exchange with an IPO that we believe offers a highly differentiated investment opportunity.
“The company will allow investors to access a leading European investment manager with considerable experience in the sector and a diverse pipeline focused on proven technologies across the European Economic Area, the UK, and Switzerland. The company is intended to assist corporates in stepping forward to play their part in addressing the major challenges facing the planet from climate change, supporting important and ambitious national targets across the region to reduce CO2 emissions.”
Tribe backs BlueBay impact bond launch
Fixed income asset manager BlueBay has launched an impact bond investing in companies making a positive contribution to people and the planet, with impact wealth manager Tribe Impact Capital as early supporters.
The UCITS fund, named the BlueBay Impact-Aligned Bond Fund, is categorised under Article 9 of the Sustainable Finance Disclosure Regulation (SFDR). It will focus on companies whose core economic activities offer investment opportunities and contribute to addressing global environmental and social challenges like climate change and inequalities, framed around seven sustainability themes. These are:
- Achieving an inclusive society
- Building knowledge and skills
- Ensuring good health, safety and well-being
- Enabling a circular economy
- Ensuring clean and plentiful water
- Promoting clean and safe energy
- Promoting sustainable mobility and infrastructure
Managed by partner and senior portfolio manager, Tom Moulds, head of ESG investment and portfolio manager, My-Linh Ngo and portfolio manager, Harrison Hill, the fund offers daily liquidity and will predominantly invest in developed market investment grade corporate bonds, as well as some high yield and emerging market bonds.
Chief impact officer at Tribe and editorial panellist for ESG Clarity Amy Clarke said: “We’re pleased to support BlueBay in the launch of their Impact-Aligned Bond Fund. This innovative strategy builds on BlueBay’s growing commitment to sustainable investing, and we’re thrilled to see them bringing their successful track record in credit to the impact arena. We hope this demonstrates to both the market and investors that a focus on responsible and sustainable business can contribute to and enhance the credit selection process.”
BlueBay’s My-Linh added: “To date, this style of investing has largely been limited to listed equities. Widening this opportunity set to fixed income is critical from a sustainability perspective. For one, the absolute size of the debt market dwarfs that of equities, so in our view if you want to make an impact you need to think beyond stocks alone. Furthermore, we see many of the activities that need to be financed to enable the sustainability transition are going to be more attractive to fixed income investors rather than equity.”
Lombard Odier launches four funds for net zero transition
5 May 2021
Lombard Odier Investment Managers has unveiled four ‘TargetNetZero’ strategies, covering both equities and fixed income, which the group said will help accelerate the transition to a more sustainable economy.
The group said the strategies will progressively accelerate the rate of decarbonisation of companies within the portfolio to target net zero CO2 emissions by 2050, which is aligned with the more ambitious objective of the Paris Agreement of limiting global warming to 1.5°C.
Investing in equities, the TargetNetZero Global Equity and TargetNetZero European Equities strategies are low tracking error strategies that tilt the MSCI World and MSCI Europe indices towards companies in climate-relevant sectors that are “aligning to the Paris Agreement through rapid decarbonisation”. The firm highlighted that while these some of these companies may be misinterpreted as laggards by investors who only consider a company’s current footprint, it is important to focus on the trajectory it is on and the targets a company may have set.
However, the strategies will tilt away from companies in high-emitting sectors that remain poorly aligned to the transition ahead and are likely to contribute to higher levels of global warming.
On the fixed income side, the TargetNetZero Global Investment Grade Credit and TargetNetZero Euro Investment Grade Credit strategies are high tracking-errorcredit strategies focused on emissions-reducing companies aligned with the Paris Agreement. Lombard Odier said the strategies target a higher level of yield than the investment grade index.
Dr. Christopher Kaminker, head of sustainable investment research, strategy and stewardship at Lombard Odier commented: “The race to net zero has started, with nearly 80% of the global economy now subject to a net zero target – a stunning acceleration from 16% last year. Increased policy ambition is set to follow in the months ahead and powerful economic and market forces are now creating and destroying value across markets. As signatories of the Net Zero Asset Managers initiative, we are committed to the development of new solutions that enable clients to position capital to capture value and hedge the risks that lay ahead.”
“We recognise that to get to net zero, we cannot merely shy away from the more difficult, hard-to-abate industries. Rather, we must seek to identify those players that are emerging as the champions of the transition ahead in each of their respective sectors. Doing so requires diversified strategies that are able to distinguish the leaders from the laggards, and re-deploy capital accordingly.”
PIMCO introduces income product
5 May 2021
PIMCO has added a fixed income product to its ESG range focusing on producing a high and consistent level of dividend income for investors.
The PIMCO GIS ESG Income Fund will join the GIS ESG Fund suite, which also includes the GIS Global Bond ESG Fund, the GIS Emerging Markets Bond ESG Fund, and the GIS Climate Bond Fund, among others.
It will be managed by a team of senior portfolio managers including Joshua Anderson, Jing Yang, Jelle Brons, Dan Ivascyn and Alfred Murata.
The group said the fund will have a global, multi-sector approach, but with ESG integrated into the investment process for those who want to pursue income from more sustainable sources.
Group CIO Ivascyn said: “The addition of the PIMCO GIS ESG Income Fund brings PIMCO’s leadership in income investing to clients who want a unique, dedicated ESG strategy.”
BlackRock launches ESG world equity fund
28 April 2021
BlackRock has launched a new ESG world equity fund.
Its Authorised Contractual Scheme (ACS) World ESG Insights Equity Fund groups ESG data into 15 descriptors, which are then mapped against sectors to produce company ESG scores. The fund is also aiming for a 50% reduction in carbon intensity compared to the FTSE Developed Index.
It will be managed by Jonathan Adams and Andre Bertolotti who will draw research insights from BlackRock’s sustainable investing team.
Sarah Melvin, head of UK at BlackRock, said: “With the significant reallocation of capital to companies with more sustainable practices already under way, pension schemes, insurers, and wealth platforms are asking for our help to realise this historic investment opportunity. This launch marks another milestone in our sustainability offering to help savers build their pension and long-term investments in companies with a positive ESG profile.”
Amundi adds fixed income fund to climate ETF range
27 April 2021
Amundi has expanded its Climate ETF range with a launch of a Paris-aligned fixed income fund.
Amundi iCPR Euro Corp Climate Paris Aligned PAB – Ucits ETF is listed on Xetra and has an ongoing charge of 0.16%.
With the launch of this fund the firm’s Paris-aligned ETF range now contains exposure to Euro Corporate fixed income as well as Eurozone, European, and global developed equity markets. All ETFs in the range are classified under Article 9 of SFDR.
Fannie Wurtz, head of Amundi ETF, indexing and smart beta, said: “The launch of this ETF illustrates our unwavering commitment to developing simple, ready-to-use tools that help investors to implement their ESG and climate strategy depending on their objectives and constraints. We believe that ETFs have a critical role to play in driving the transition to a low carbon economy.”
BlackRock ups sustainable Ucits range to $50bn with two new ETFs
26 April 2021
BlackRock has launched two new Paris-aligned ETFs, bringing the iShares Sustainable Ucits range to more than $50bn in assets.
The iShares S&P 500 Paris Aligned UCITS ETF (UPAB) and the iShares MSCI World Paris Aligned UCITS ETF (WPAB), aim to reduce exposure to transition and physical climate risks, capture opportunities arising from the transition to a lower-carbon economy, and screen out exposure to businesses involved in activities such as oil and gas, thermal coal, controversial weapons, high carbon electricity generation and social norm violators.
Manuela Sperandeo, BlackRock’s EMEA head of sustainable indexing said: “As the low-carbon transition continues to transform market return expectations, we believe clients are best served by being at the forefront of that transition. This will require investors to embrace new strategies, and ETFs are playing a central role as foundational building blocks for people seeking out affordability, transparency, and convenience. Our focus remains on providing a broad and deep set of sustainable investment tools that help investors make informed choices.”
The iShares S&P 500 Paris Aligned UCITS ETF tracks the S&P 500 Paris Aligned Climate Sustainability Screened Index, while the iShares MSCI World Paris Aligned UCITS ETF tracks the MSCI World Climate Paris Aligned Benchmark Select.
Reid Steadman, global head of ESG at S&P Dow Jones Indices said: “We are very pleased that BlackRock has licensed the S&P 500 Paris-Aligned Climate Sustainability Screened Index to launch a new exchange-traded fund for the European market. The index’s design aligns with the principles of the landmark Paris Agreement and incorporates factors to manage transition risks and capture climate change opportunities. As global investors’ appetite for more sustainable products grow, there is also a need for independent, reliable and transparent benchmarks to measure companies’ ESG performance as we move towards a low carbon economy.”
Remy Briand, head of ESG at MSCI said: “The MSCI Paris Aligned Benchmark Select Indexes are intended to support the needs of investors with investment strategies that aim to mitigate climate transition and physical risks through the decarbonisation of the economy while being compatible with the Paris Agreement. MSCI recently called on asset managers to scale up the availability of investment options aligned with a net-zero trajectory as a means to accelerate the flow of capital for the net-zero revolution. We believe this will help tackle the single greatest challenge humankind has faced and ignite a new era of sustainable growth.”
Brewin Dolphin launches sustainable MPS for IFAs
22 April 2021
Wealth firm Brewin Dolphin will roll out a managed portfolio service (MPS) for IFAs, which will be aligned to sustainability principles.
The firm said the range will comprise five model portfolios designed to maximise returns from income and capital growth.
The portfolios will be made up of funds that exclude exposure to “controversial sectors” and are invested in companies that have a positive social or environmental impact. Such funds will go through a three-stage selection process, including:
- Exclusion: not invested in companies involved in tobacco, weapons, thermal coal, gambling, and adult entertainment;
- ESG leaders: funds that set industry standards in integrating ESG factors into investment decisions and stewardship activities; and,
- Impactful companies: funds invested in firms that positively and measurably contribute to social and environmental challenges.
The five portfolios – called Income, Income Higher Equity, Balanced, Growth, and Global Equity – will be rebalanced each month and will be mapped to all the main risk profilers, Brewin said.
The DFM charge will be the same as the current MPS models at 0.30% with an estimated total charge of between 0.54% and 0.76%.
At launch, the Sustainable MPS will be available on several platforms including 7IM, Aegon ARC, The Aegon Platform, AJ Bell, Aviva, Hubwise, Novia, and Standard Life Wrap.
Evolving client needs
Robin Beer, chief executive of Brewin Dolphin, said: “We are proud of our approach to responsible investment, based on ESG integration and active ownership, which underpins our existing MPS product.
“However, we realise that clients’ needs are always evolving. Sustainable MPS meets the needs of IFAs’ clients that want more – by excluding harmful sectors and by investing in sustainable funds and companies which contribute positively to society and the environment.”
Tom Blathwayt, head of sustainability at Brewin Dolphin, said: “It is important to measure and monitor the impact of a sustainable portfolio given the global challenges we all face. We also want to assess our objective of investing in companies and funds that have a positive societal or environmental impact.
“Transparency is really important and have decided to use a third party, MSCI, to provide an independent assessment of the ESG risk, carbon intensity and SDG alignment of our portfolios.”
Hargreaves adds ESG funds to Wealth Shortlist
22 April 2021
Hargreaves Lansdown is looking to beef up the number of ESG funds on its Wealth Shortlist following a surge in client demand but has been called out for being late to the party.
The D2C giant announced it would be adding the Janus Henderson UK Responsible Income and the Trojan Ethical Income funds to its revamped best buylist, lifting the number of responsible investment funds on its 71-strong shortlist from three to five.
Dominic Rowles, investment analyst at Hargreaves Lansdown, said that investing with ESG considerations in mind is “simply good risk management,” adding that investors should be looking to fill their portfolios with companies which deliver sustainable revenues, profits and dividends.
Hargreaves customers plough record levels of cash into responsible funds
Rowles said the D2C giant was responding to the surge in demand for ESG products. Citing data from the Investment Association, he noted UK savers poured almost £1bn a month on average into responsible investment funds last year.
This trend was mirrored across Hargreaves Lansdown’s own clients who ploughed a record level of cash into responsible funds in 2020, with net flows over 4,000% higher than in 2016.
“As a result of that feedback, we’ve committed to covering more responsible investment funds and today we’re announcing two additions to the Wealth Shortlist – we expect to see more added to the list over time,” Rowles said.
DIY platforms have typically been slow to ride the ESG wave
Holly Mackay, founder of Boring Money, believes Covid-19 accelerated the move to sustainable investing as it triggered an “emotional response,” as well as a “reassessment of lifestyles and priorities”.
She points out that 2020 was a “very good year for the cold hard cash proof points of sustainable investing” as these funds “typically did pretty well”.
However, Mackay commented that “DIY platforms have typically been surprisingly slow to ride this wave and help their customers pick funds that map to their preferences and priorities”.
She believes that Hargreaves Lansdown is “playing catch-up and realigning their research focus with what investors in 2021 actually want to see”.
‘They will have seen Baillie Gifford Positive Change has crept into the best sellers’
Clive Waller, managing director of CWC Research, said “the important thing is the direction of travel” but that “client pull is the driver” behind this move.
“They will have seen that Baillie Gifford Positive Change has crept into the best selling funds lists, demonstrating that direct fund buyers are taking note,” he said.
Rowles highlighted that income is hard to come by for responsible investors as 70% of all UK Equity Income funds invest in tobacco companies, over 80% have a holding in the oil and gas sector, 78% own mining shares and around half invest in aerospace and defence businesses.
“Funds that avoid these areas while also aiming to generate a reasonable level of income are few and far between – but they are out there.”
He adds that the lack of exposure to typical equity income hunting grounds means responsible investment funds will perform differently to their traditional counterparts at times and could act as a portfolio diversifier.
The £290m Trojan Ethical Income fund managed by Hugo Ure returned 23% over three years according to Trustnet, while the £310m Janus Henderson UK Responsible Income fund managed by Andrew Jones returned 17.3% over three years, compared to the IA UK Equity Income average of 7.2%.
Eurazeo launches sustainable maritime fund
20 April 2021
Eurazeo has launched a sustainable maritime fund to finance infrastructure and technology in the sector, as well as help transition to a low-carbon economy.
The Sustainable Maritime Infrastructure thematic fund will support around 50 European facilities that will back the transition of the maritime economy to become carbon neutral by 2050 and in line with the ambition announced in the European Green Deal. The fund has a target size of €300m.
“Currently, 90% of the world’s goods are transported by sea”, the firm said. “Therefore, the decarbonisation of the maritime sector is crucial to the fight against climate change. To meet this challenge, the fund will mainly finance three types of infrastructure: ships equipped with advanced technologies that negate or curtail environmental harm, innovative harbor equipment, and assets that contribute to the development of offshore renewable energy.”
See also: – Investor letter to UN calls for action on ‘humanitarian crisis at sea’
It added with the new International Maritime Organisation (IMO) regulation to reduce the sulphur content of fuels from 3.5% to 0.5%, which came into force on 1 January 2020, the fund will contribute to the reduction of GHGs as well as sulphur oxides (Sox) and nitrogen oxides (NOx) emissions, which are particularly harmful to air quality.
The emissions reductions achieved by the fund’s investments will be measured through quantitative indicators.
Sylvain Makaya, partner at Eurazeo, said: “Our new fund is a financing tool that will contribute to the reduction of greenhouse gas and sulphur, reduction measured audited by independent experts, then communicated to our investors. Its implementation, the process of which has been evaluated with full transparency by independent organisations, underlines our aims and ambitions to deploy meaningful funds that provide a response to the environmental and climatic challenges of our time.”
CPR AM launches new climate equity and bond funds
15 April 2021
CPR AM, the thematic equities arm of European asset manager Amundi, has launched two new climate funds: an equity and a bond fund.
CPR Invest – Climate Action Euro, managed by Alexandre Blein, is an equity fund investing in all sectors in the Eurozone. It initially excludes 36% of the 471 MSCI EMU Index companies scored by CDP.
CPR Invest – Climate Bonds Euro, managed by credit manager Antoine Petit and head of treasury and credit solutions Julien Levy is a Euro-denominated investment grade bond fund active across all sectors, OECD countries, maturities and seniorities, targeting companies excelling in decarbonising across the credit spectrum, not just the green bond market. It excludes 35% of the initial universe of 925 issuers. The fund also invests in the BB segment.
Gilles Cutaya, deputy CEO of CPR AM, said: “These funds are a direct response to investors’ demands to decarbonise their portfolios and consolidate the range of solutions that CPR AM is able to offer them across all main asset classes. CPR AM’s climate range already has more than €1 bn in AUM and we continue to reinforce our ambition to become the leading climate partner for investors for years to come.”
Both funds use CDP’s scoring methodology, which the firm also uses for its climate action fund. This rates companies from A to D on their transparency and their efforts in tackling climate change. CPR’s climate fund hold companies rated A or B, and C only in cases where the company has a science-based target.
Laurent Babikian, director capital markets at CDP Europe, said: “These investments – based on the best CDP scores and science-based targets – bring to the market more credible investment solutions to the climate crisis based on the best available data. They will help finance the transition to a net-zero emissions economy.”
Vontobel launches article 9 green bond fund
14 April 2021
Vontobel has launched a green bond fund, which qualifies as article 9 under the Sustainable Financial Disclosures Regulation.
The Vontobel Fund – Green Bond is managed by Daniel Karnaus and Anna Holzgang and is stringent about which green bonds are eligible for investment. The firm said it has been launched to meet client demand.
“Climate change is a real financial risk for investors, and green bonds provide an effective tool to address it,” Karnaus said. “The fund’s impact is also measurable. For every 1 million euro invested in the fund, we estimate that we reduce carbon emissions equivalent to 492 t CO2 equivalent, or about 206 fewer passenger cars on the streets per annum.”
AXA rebrands women’s fund to social progress fund
10 April 2021
AXA Investment Managers is widening the scope of its women empowerment fund to include broader social issues.
The AXA WF Framlington Women Empowerment Fund, which was launched in 2017, has become the AXA WF Framlington Social Progress Fund and will now focus on more of the UN SDGs and invest in companies addressing a range of social needs.
Still managed by Anne Tolmunen, the strategy will focus on access to affordable housing, essential infrastructure, and financial and digital inclusion; protection through healthcare solutions and safety; and progress through education, entrepreneurship and wellbeing.
Tolmunen said: “The economic empowerment of women will continue to form a critical area of focus within the Social Progress fund, while promoting gender diversity in the workplace will continue to be a cornerstone of AXA IM’s active ownership agenda addressed through our reinforced engagement and voting capabilities and other initiatives such as the 30% Club Investor Group in France and in the UK”.
See also: – French investors engage companies on gender diversity
The fund is part of AXA IM’s ACT fund range and it classified as an article 9 fund in the Sustainable Financial Disclosures Regulation. The firm said 5% of the management fees paid by the fund will continue to be donated by AXA IM to several charities supporting education (Epic Foundation), biodiversity and climate and health initiatives (Access to Medicine Foundation) among others.
Rathbones launches sustainable multi-asset range
29 March 2021
Rathbones has launched a new range of sustainable multi-asset funds to meet client demand, according to manager Will McIntosh-Whyte.
McIntosh-Whyte will be joined by head of multi-asset David Coombs as managers on the four funds, with input from Rathbone Greenbank head of ethical, sustainable and impact research Kate Elliot.
The range comprises the Rathbone Greenbank Dynamic Growth Portfolio, which targets an annual return of 4% higher than inflation; the Rathbone Greenbank Strategic Growth Portfolio, which targets 3% above inflation; the Rathbone Greenbank Defensive Growth Portfolio, which targets 2% above inflation; and the Rathbone Greenbank Total Return Portfolio, which targets a 2% return above the Bank of England base rate.
The range will use the same processes as the firm’s other multi-asset ranges but applies a sustainable overlay. But McIntosh-Whyte was quick to assure ESG Clarity this doesn’t make other ranges ‘unsustainable’.
“People’s values differ, some people aren’t on that [sustainability] journey,” he said. “We still consider ESG risks in our existing multi-asset ranges.”
Amundi revamps green bond fund to align with ‘Just Transition’
13 April 2021
Amundi has revamped an existing European fixed income portfolio to focus on investing in companies supporting the energy transition while meeting criteria that consider social cohesion.
The Just Transition for Climate Fund was previously called the Amundi Responsible Investing– Green Bonds, and was launched in 2015 with an objective to fight global warming. Amundi, the European asset manager with €1.7trn in assets under management, said transforming the fund into a strategy focusing on the Just Transition is based on the conviction that the energy transition must not be to the detriment of social issues. The portfolio will hold companies selected for their commitment to environmental and social objectives that live up to the ambitions announced in the Paris Agreement, the group added.
Furthermore, the revamped fund will be:
- Fully aligned with the energy transition, incorporating an objective to reduce the carbon footprint;
- Socially inclusive, by integrating a ‘Just Transition’ score incorporating the different social aspects involved in the transition to a low-carbon economy: impact on employees, consumers, local communities and society at large; and
- Dynamic and forward-looking, through its tailor-made engagement policy to support issuers in their transition in line with the environmental and social objectives of the strategy.
Amundi’s Just Transition scoring system has been designed to attribute scores which measure the performance of bond issuers relative to their peers on specific social issues. Each dimension is then weighted according to their importance in the social acceptability of the transition toward a low carbon economy.
See also: – Snowball’s Daniela Barone-Soares: We need a just recovery from Covid-19
The fund’s financial objective is to outperform the Bloomberg Barclays Euro Aggregate Corporate Index but the management team must also maintain a carbon footprint 20% lower than the benchmark.
Jean-Jacques Barberis, head of the institutional and corporate clients division & ESG at Amundi, commented: “Within the Paris Agreement, the concept of a fair transition is central to the transformation to ‘net zero’ economies. There will be no transition if it is not socially acceptable. The social dimension of the transition is therefore becoming increasingly important for investors. The Just Transition for Climate fund is the first attempt to provide investors with a unique solution to measure and integrate the financial risks associated with climate change and use their investments for an inclusive transition in line with the Paris Agreement. The methodology will progressively evolve based on our dialogue with corporates.”
Invesco relaunches European fund with ESG focus
13 April 2021
Invesco has also refreshed an existing product to focus on ESG: the group’s Invesco Pan European Structured Equity Fund is to be renamed the Invesco Sustainable Pan European Structured Equity Fund and will have ESG embedded into its strategy.
See also: – Invesco UK’s Stephanie Butcher: ‘ESG is the movement of our age’
The fund, which has been in existence as a European low volatility strategy for 15 years, is managed by Thorsten Paarmann and Alexander Uhlmann in Frankfurt. They will apply ESG criteria to the factor-based style the strategy adopts. The fund takes a quantitative approach to investing with the aim to achieve superior risk-adjusted returns, from intended factors Momentum, Quality, Value and Low Volatility.
Under the new ESG criteria, 40% of the managers’ previous investment universe is now excluded. Companies now banned from the portfolio are those that engage in controversial activities, such as those involved in fossil energy sources, weapons and nuclear power, and the managers will also apply a best-in-class screening to highlight energy transition measures for the stocks making the most progress in this area.
Fund manager Paarman said: “Research and evolution is at the heart of what we do at Invesco Quantitative Strategies (IQS) and has been for more than 30 years. As our research deepens, we constantly evolve alongside our clients, believing there are new risks and opportunities that can provide better protection to the fund. This is why we’ve made the decision to make changes to the fund’s strategy and to embed ESG criteria explicitly into the existing process.”
Recent Morningstar data highlighted an increasing number of funds were being repurposed and rebranded into sustainable funds, with at least 250 vehicles being transitioned in Europe in Q4 2021 alone.
Artemis targets early-stage disruptors for global equity fund
6 April 2021
Artemis Fund Managers has launched a global equity fund to invest in companies addressing challenges to sustainability.
The Artemis Positive Future Fund contains 35-45 early-stage quoted companies selected for their potential to “disrupt inefficient, outmoded business models”, the firm said.
“The best long-term opportunities for growth lie in companies that are addressing the challenges of sustainability,” said Craig Bonthron, one of the managers of the fund. “Our aim is to identify emerging companies that are doing this and that are poised to displace incumbents.”
Bonthron is joined by Neil Goddin, Jonathan Parsons and Ryan Smith in managing the fund. The four previously managed the Aegon Global Sustainable Equity Fund.
The fund aims to outperform the MSCI AC World (TR) index.
NNIP adds sovereign green bond to fund range
1 April 2021
NN Investment Partners (NNIP) has added a sovereign green bond fund to its range of green bond funds.
The NN (L) Sovereign Green Bond fund aims to have a positive environmental impact through the projects it finances, with a specific focus on treasury and government-related bonds.
The firm now offers a full range of green bond funds: aggregate, corporate, sovereign, and an option for a fund with a shorter duration. It said the new sovereign fund offers investors greater flexibility.
Bram Bos, lead portfolio manager green nonds at NNIP, said: “I am proud to be part of the development of an asset class that will play a key role in financing climate change mitigation and supporting the environment.
“In the past, investor demand for green bonds mainly came from impact investors, we now see more typical fixed income investors allocating to green bonds as well. These investors are looking to make their portfolio more sustainable without sacrificing financial performance. Offering a broad range of green bond strategies makes this even easier, as it allows them maximum flexibility to allocate to green bonds that replicate the characteristics of traditional bonds in their portfolio.”
BlackRock unveils two green bond ETFs
29 March 2021
BlackRock has expanded its sustainable iShares range with two fixed income products.
It has launched the iShares € Green Bond UCITS ETF, and the iShares Global Govt Bond Climate UCITS ETF, in what the firm said is an industry first.
The iShares € Green Bond UCITS ETF tracks the Bloomberg Barclays MSCI Euro Green Bond SRI including Nuclear Power Index offering exposure to over 300 euro-denominated investment grade green bonds from 160 issuers across four sectors of the fixed income market. BlackRock said it will publish proprietary portfolio impact reports on the environmental benefit of the underlying holdings.
Secondly, the iShares Global Govt Bond Climate UCITS ETF offers investors cost effective exposure to government bonds whilst incorporating climate risk, said BlackRock. It tracks the FTSE Advanced Climate Risk Adjusted World Government Bond Index and offers exposure to global government bonds, taking the FTSE World Government Bond Index as a starting point. This index adjusts country weights based on a forward-looking assessment of climate risk faced by sovereigns using three pillars; physical risk, transition risk and resiliency to climate change.
Brett Olson, head of fixed income iShares in EMEA for BlackRock, said: “We are committed to helping investors build sustainable portfolios that align with their specific goals. The AUM of our iShares EMEA fixed income range has grown by around 29% in the past year, as investors are increasingly using them as transparent, efficient building blocks to access the bond market sustainably.”
Both ETFs have a TER of 20bps.
Vanguard adds global all-cap ESG ETF
29 March 2021
Vanguard has launched an ESG ETF investing in global companies across the cap spectrum.
The Vanguard ESG Global All Cap UCITS ETF tracks the FTSE Global All Cap Choice Index creating a portfolio of global equity exposure. Created by FTSE Russell, this index screens the FTSE Global All Cap Index for ESG criteria so that companies exposed to fossil fuels, gambling, tobacco, weapons and/or involved with controversies in relation to labour, human rights, environmental and anti-corruption standards, as defined by the United Nations Global Compact Principles, are not included.
Vanguard’s new ETF is managed by the group’s equity index team, which manages more than $4.8trn in assets across the globe and carried an OCF of 0.24%.
Aegon converts global equity fund into sustainable mandate
29 March 2021
Aegon has repositioned its UK-domiciled Global Equity Fund as a sustainable equity product.
The group said it will remain a concentrated, growth-focused global equity portfolio, that is unconstrained by geography or sector but will adopt a sustainable investment philosophy and criteria from 1 June 2021.
This follows the transition of the Dublin-domiciled Aegon Global Sustainable Equity Fund and investor demand for a UK-domiciled equivalent, which will be named the Aegon Sustainable Equity Fund.
In a statement, Aegon said consideration of ESG factors in the investment process has been a part of the strategy for some time but the formal change will mean each security will be subject to analysis from a sustainability perspective by the Aegon AM Responsible Investing team, who have the right to veto stocks from the portfolio.
Andrei Kiselev and Malcolm McPartlin will become managers of the Aegon Sustainable Equity Fund, and already manage the Dublin equivalent. Current managers Mike Nicol and Euan Weir will remain a part of Aegon’s equity team.
Stephen Jones, Global CIO Equities at Aegon Asset Management said: “We have seen strong demand for our responsible investment products and the update to our Global Equity Fund is borne out of client demand for a UK domiciled version of our Dublin-registered fund.”
Recent Morningstar data highlighted an increasing number of funds were being repurposed and rebranded into sustainable funds, with at least 250 vehicles being transitioned in Europe in Q4 2021 alone.
BMO GAM completes sustainable multi-asset range
16 March 2021
BMO Global Asset Management (BMO GAM) has added an adventurous and defensive multi-asset fund to its sustainable portfolio to cater to more risk appetites.
The BMO Sustainable Universal MAP Adventurous fund targets a return of CPI + 5% over five years and is in the IA Volatility Sector. And the BMO Sustainable Universal MAP Defensive fund targets a return of CPI + 1% over five years and is in the IA Volatility Sector.
The range, launched in December 2019, already consists of cautious, balanced and growth funds, and now has more than £100m of assets under management.
Rob Thorpe, head of intermediary distribution for UK and Europe at BMO GAM, said: “We’ve responded to demand and launched two additional sustainable funds, adventurous and defensive, to complete a comprehensive range of sustainable options, suiting most clients’ risk appetites, that are very well priced and fully actively managed.
“We believe the range is ideal for advisers seeking a well-costed active sustainable range as part of their Central Investment Propositions and for platforms or pension providers seeking sustainable default options.”
The investments are first selected from BMO GAM’s Responsible and Sustainable Opportunities strategies, which advocates avoiding assets with unsustainable practices and selecting those that make a positive contribution, while also engaging and voting on ESG issues.
In 2020, across the three portfolios, BMO GAM engaged with 107 companies, with 258 overall engagements in 18 countries. The team voted at 90 meetings, achieving 59 positive outcomes.
Simon Holmes, lead manager of the BMO Sustainable Universal MAP range, commented: “An active approach is important in maximising sustainability within an investment portfolio.”
All five funds in the Sustainable Universal MAP range have an ongoing charge capped at 0.39%.
Invesco launches two ESG ETFs
15 March 2021
Invesco has launched two new ESG ETFs, bringing its total ESG ETF products launched this year to six.
The Invesco FTSE All Share ESG Climate UCITS ETF uses FTSE Russell’s target-exposure approach to create a UK equity portfolio with significant improvements in environmental characteristics.
The Invesco MSCI Europe ex UK ESG Universal Screened UCITS ETF aims to increase exposure to European companies demonstrating a robust and improving ESG profile, while reducing weight in those with below-average or worsening ratings relative to peers.
Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, said: “Flows into ETFs with an ESG objective continue to outpace those without one. As demand continues to broaden out, investors need a greater variety of exposures to tailor asset allocation and meet portfolio objectives. This year, we have started to see an upturn in demand for strategies with a similar profile to standard indices, but with a methodology that rewards companies’ demonstrating better ESG credentials and particularly regarding their impact on the environment.
Chris Mellor, head of EMEA ETF equity and commodity product management at Invesco, added: “While excluding the most controversial businesses, we wanted to make sure that we include companies that are capable of improving their ESG profile , reducing their impact on the climate and helping to solve the world’s environmental problems. Our position as an engaged and active owner of the stocks we hold in our portfolios, both passive and actively managed, allows us to encourage and promote positive change.”
|ETF name||Invesco FTSE All Share ESG Climate UCITS ETF||Invesco MSCI Europe ex UK ESG Universal Screened UCITS ETF|
|Index name||FTSE All Share ex Investment Trusts ESG Climate Select Index||MSCI Europe ex UK ESG Universal Select Business Screens Index|
|Base / Trading currency||GBP / GBP||EUR / GBP|
|Ongoing charge figure p.a.||0.12%||0.16%|
Federated Hermes reclassifies ESG ranges and adds sustainable global equity fund
15 March 2021
The international business of Federated Hermes has launched a new Sustainable Global Equity Fund, the first in a new range.
The fund will be available in the second quarter of 2021 and sit in Federated Hermes’ new Sustainable category, which is now distinct from its Active ESG and Impact categories. Its investment process will encompass exclusions, proprietary sustainability scores and a thematic framework focused on four main areas: environmental preservation, social inclusion, health and wellbeing and efficient production and resource usage.
Martin Todd, lead manager of the fund, said, “Companies leading the sustainability transition have more than just excellent ESG profiles. Their activities directly contribute to a more sustainable future.”
Harriet Steel, head of business development, added: “We have seen a welcome and marked acceleration towards responsible and sustainable investing in the last year, with clients of all types reassessing their long-term objectives. The proliferation of related products has made it harder for investors to decipher and assess what is available to them. Aligning with EU regulation coming into force this year, the reclassification and expansion of our product range will offer transparency to clients and reflect the sustainable heritage and integrity of our firm.”
Aviva brings Stewardship Funds to UK wholesale market
15 March 2021
Aviva Investors has launched the OEIC feeder versions of the Aviva Stewardship Funds to bring the range to the UK wholesale market.
The firm said the funds aim to exclude companies that do not meet certain ethical standards or that harm society or the environment, support companies that make a positive contribution to society, and encourage better business practices through shared ownership and engagement.
Steve Waygood, chief responsible investment officer at Aviva Investors, said: “It’s now almost three years since Aviva Investors took over management of the Stewardship Funds and we’re delighted to take the stewardship story a step further by launching the OEIC feeder versions. The philosophy of the range acknowledges that the products and services that companies provide can either help or hinder the development of a sustainable future. This new development will help provide even greater access to those who want their money to help power a transition to a more sustainable future.”
Launched in 1984, the Stewardship Funds currently have £2.5bn of assets under management and incorporate four funds:
- Aviva Investors Stewardship UK Equity, managed by Trevor Green and Tom Grant
- Aviva Investors Stewardship UK Equity Income, managed by Trevor Green and Tom Grant
- Aviva Investors Stewardship International Equity, managed by Jaime Ramos-Martin
- Aviva Investors Stewardship Fixed Interest, managed by Tom Chinery
Apiramy Jeyarajah, UK head of wholesale at Aviva Investors, said: “ESG and ethical investing is now more than ever a key focus for the asset management industry, and the launch of the OEIC feeders into our Stewardship Funds will give the UK wholesale market more flexibility and ease with which to choose to invest responsibly.”
First Trust launches global ESG ETF
11 March 2021
First Trust has launched a global ESG ETF aimed at wealth managers, discretionary fund managers, advisers and institutional investors.
Tracking the MSCI ESG Index, the First Trust Global Capital Strength ESG Leaders UCITS ETF evaluates issuers to include: a minimum three-month average trading volume of $5m, a minimum of $1bn in cash and short-term investments, long-term debt to market capitalisation ratio of less than 30%, as well as a return on equity of greater than 15%.
The portfolio is then adjusted to 50 stocks, taking into account short- and long-term volatility measures as well as country and sector concentration. These are then equally weighted, and ratings are reviewed between rebalancing dates.
Rupert Haddon, managing director and head of sales at First Trust Global Portfolios said the fund blends to philosophies. “By selecting the best-performing ESG companies combined with the Capital Strength fundamental methodology, this new fund can provide investors with a sustainable competitive advantage and a superior long-term investment opportunity.”
Axel Kilian, managing director, head of client coverage EMEA at MSCI, said: The MSCI ESG Leaders Indexes target companies that have the highest ESG rated performance in each sector of the parent index. The index suite utilizes MSCI’s award-winning ESG Research and ESG Ratings to identify companies that have demonstrated an ability to manage their ESG risks and opportunities and are therefore eligible for inclusion.”
Aegon transitions growth fund into sustainable strategy
10 March 2021
Aegon Asset Management has turned the Aegon Diversified Growth Fund into a sustainable multi-asset investment strategy, and renamed it the Aegon Sustainable Diversified Growth Fund.
In January 2020 managers Colin Dryburgh and Robert-Jan van der Mark began transitioning the fund, initially through the global equity allocation, followed by the fixed income and alternatives allocations. The fund’s name and investment policy will change to reflect the sustainable focus, although the firm said the objective will remain the same.
Stephen Jones, global CIO of multi-asset and solutions, said: “The Aegon Diversified Growth Fund is already capitalising upon many of the sustainability-related shifts that are taking place globally. Incorporating a sustainable philosophy and practice will help us to capture opportunities and minimise unintended ESG-related risks.”
Subject to regulatory approval, Aegon Asset Management will also adopt a sustainable focus for the Dublin-listed Aegon Global Diversified Growth Fund.
GLA and Big Society Capital back property fund aimed at supporting London’s homeless
10 March 2021
Social impact investment company Resonance has partnered with a homelessness charity to launch a property fund to help meet increasing demand to house rough sleepers in London.
The group has joined forces with social landlord and charity Nacro to set up the new social impact homelessness property fund called Resonance Everyone In Limited Partnership.
It starts with an initial investment of £12.5m and target fund size of £15m. Greater London Authority (GLA) and Big Society Capital are among the first investors.
Resonance said there has been a rise in rough sleeping in the capital over the past year due to the pandemic, and nearly 15,000 people were temporarily accommodated in hotels to protect them from the risk of Covid-19.
The new fund will focus on purchasing affordable homes in London, with the aims of providing 50 homes for those sleeping rough on London’s streets and, while Resonance said it does not know the exact numbers because of tenancy length, it estimates over 200 people will be housed over the lifetime of the fund.
Mayor of London, Sadiq Khan said: “A secure, long-term home should be a basic right for every Londoner, but a decade of austerity and the economic crisis created by the pandemic means far too many people have found themselves on the street or in temporary accommodation.
“My teams and their charity partners are working around the clock to help the most vulnerable people to work towards a life off the street – but this is only possible if there is high quality, affordable accommodation available at the end of their journey. The work being carried out by Resonance and Nacro will create the homes our fellow Londoners deserve and ensure they have access to the support they need to rebuild their lives.
John Williams, investment director & head of property funds at Resonance, said: “This investment from the Mayor of London, Sadiq Khan, allows Resonance to extend its long running homelessness property fund initiative in London to help reach the specific and urgent need arising from the pandemic – helping provide move-on accommodation for individuals who have been temporarily housed in hotels and other emergency accommodation, and where there is now a historic opportunity to help prevent a return to the streets by providing a better way forward.
“We are pleased to be working with Nacro as our charity partner on this initiative, who have significant experience of working with this tenant group and providing appropriate support to ensure successful tenancies and progression for individuals.”
Neuberger Berman launches pair of sustainable equity funds
10 March 2021
Neuberger Berman is adding two sustainable equity vehicles to its UCITS fund range investing on a global and European basis.
The Neuberger Berman Global Sustainable Equity and European Sustainable Equity funds will be led by Hendrik-Jan Boer, Alex Zuiderwijk and Jeroen Brand. They will typically consist of 30-60 stocks seeking to invest in “quality companies where sustainability reinforces returns”.
Lead portfolio manager Boer said: “Rapid societal and technological change is driving corporate evolution and creating value chain disruption. We are seeing increasing growth in what we call ‘conscious consumers’, who are holding corporations and governments to account through consumption behaviour, elections and activism. This coupled with active regulators implementing new directives across borders to address ESG issues is driving a new wave of high-quality opportunities for sustainable investors.”
The team will work closely with the firm’s ESG investing team and be supported by a four-strong team of career analysts focused on bottom-up assessment with a value chain lens, across fintech & financial inclusion, energy transition, digital enterprise, conscious consumer, and access to healthcare.
Quilter Cheviot unveils multi-asset Positive Change strategy
10 March 2021
UK wealth manager Quilter Cheviot has launched a multi-asset strategy investing in funds exposed to companies with more sustainable business practices and are making a positive contribution to the environment and society
The Positive Change strategy invest in funds across global equities, fixed income and alternatives focusing on how the management teams are on voting and engaging with their portfolio holdings.
Quilter Cheviot’s ESG fund research lead Melissa Scaramellini, commented: “We know that more solutions are needed to tackle the issues facing the environment and society and that the majority of companies need to take further action to become more sustainable.
“We want to encourage that positive change and believe this strategy brings a pragmatic approach to achieving that. We are excited to bring a strategy to clients that combines funds that invest in companies that are already making a positive contribution, along with funds managed by leading ESG practitioners that engage with companies to accelerate change where it’s most needed.”
Examples of companies that may feature in the new strategy include businesses leading healthcare advances or new technologies to increase energy efficiency.
Invesco adds clean energy ETF
2 March 2021
Invesco has launched a global clean energy product listed on the London Stock Exchange.
Available to European investors, the Invesco Global Clean Energy UCITS ETF will track the WilderHill New Energy Global Innovation Index which consists of global companies whose innovative technologies focus on the generation and use of cleaner energy, energy conservation, efficiency and the advancement of renewable energy.
Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, commented: “The biggest and arguably most urgent challenge facing the world is how to avoid climate catastrophe. The solution hinges on our transition to cleaner sources of energy, which is a diverse and rapidly evolving space. That is why we are so excited about offering investors access to the expertise of WilderHill. This California-based firm has been an industry leader since 2004 and constructed the first clean energy indices.”
He added the ETF will be exposed to companies focused in wind, solar, biofuels, hydro and other renewable energy sources as well as those involved in energy conversion, storage, conservation and efficiency. The ETF will also avoid companies with exposure to fossil fuels.
The ETF carries an ongoing charges figure of 0.60%.
LGIM launches climate-tilted index equity strategy for institutional investors
2 March 2021
Legal & General Investment Management (LGIM) has unveiled a low carbon transition fund range for pensions clients.
The LGIM Low Carbon Transition Index Equity Fund range will consist of climate-tilted index equity strategies seeking to significantly reduce its exposure to carbon emissions in alignment with 2050 net zero goals.
It will use LGIM’s climate scoring framework and will reduce initial exposure to carbon-emitting assets by 70% compared to the broad market capitalisation benchmark. The funds will also have significantly lower exposure to fossil fuel reserves and higher exposure to companies with green revenues.
LGIM has worked with the investment consultant LCP on the design of the strategy. Claire Jones, head of responsible investment for LCP and ESG Clarity editorial panellist said: “We’re delighted to have worked with LGIM on the design of this fund range to meet the needs of our clients. It enables pension schemes to manage their climate risk exposure by investing in low-cost equity funds that combine a large reduction in carbon intensity on day one, a commitment to reduce that intensity further over time, and strong stewardship.”
Stefan Jean-Luc Bilby, senior index distribution manager at LGIM, commented: “Addressing climate-related concerns is of paramount importance to our clients given growing regulatory pressures and the global shift towards net zero. We are thrilled to have launched the Low Carbon Transition Fund range; it offers investors an effective means to mitigate their climate risks using an innovative index approach. This launch provides further evidence of LGIM’s commitment to helping clients position themselves for a shift to a low carbon economy within their investments.”
AJ Bell launches responsible MPS range as ESG demand ramps up
2 March 2021
AJ Bell platform Investcentre is launching a responsible managed portfolio service (MPS) to capitalise on client demand for ESG investment.
The range contains six risk-rated portfolios investing in cash, bonds, equities and alternatives.
Each portfolio will use ETFs and have a 25% allocation to the VT AJ Bell Responsible Growth fund, which the firm said gives “flexibility to make tactical allocation changes within the fund, rather than the rest of the portfolio, minimising clients’ potential capital gains tax liabilities”.
The carbon intensity of the balanced portfolio in the AJ Bell Responsible MPS is estimated to be 77% lower than the balanced portfolio in its Passive MPS.
The firm compared switching a £20k investment out of its passive MPS into the responsible MPS to “a high meat-eating couple going vegan”, while switching a £100k investment gives the same reduction in carbon emissions as planting 19 acres of forest in a year.
AJ Bell chief investment officer Kevin Doran said: “The demand for portfolios with a responsible investment approach has never been higher. Advisers have told us this is important to them and a growing number of their client so, in line with our commitment to offering advisers choice, we have expanded our MPS to include a responsible investment option.”
The responsible MPS will have an investment management fee of 0.15% with no VAT, as well as the normal platform charges. The balanced, moderately adventurous and adventurous portfolios will have an OCF of 0.46%, while the cautious and the moderately cautious will be 0.42% and 0.44% respectively.
Doran added: “All the portfolios have OCFs of under 0.5% per annum, so we believe this is giving advisers a highly competitive solution for clients that want to invest responsibly without sacrificing the potential for positive returns.”
AJ Bell’s platform has gained popularity over the last year, with customer numbers increasing by 31% in the 12 months up to 31 December 2020, according to their Q1 trading update. The platform’s net inflows increased by 67% to £1.5bn.
PGIM launches global ESG bond fund
25 February 2021
PGIM, the $1.5trn global investment management business of Prudential Financial, has launched the PGIM Global Total Return ESG Bond Fund with $25m assets under management.
Managed by PGIM Fixed Income trio Robert Tipp, Michael Collins, and Matthew Angelucci, the PGIM Global Total Return ESG Bond Fund uses the firm’s proprietary ESG impact rating framework and is benchmarked against the Bloomberg Barclays Global Aggregate Index.
Tipp said: “While many global fixed income markets have rebounded since the lows of the coronavirus panic earlier last year, we expect volatility and confusion to remain high, creating opportunities to add value through active management. Our strategy combines global macro views and bottom-up fundamental research to identify the best fixed income opportunities globally.”
The PGIM Fixed Income team has also recently hired Eugenia Unanyants-Jackson for the newly created role of head of ESG research.
The ESG bond fund is the second dedicated ESG UCITS strategy offered to non-US investors, following the June 2020 launch of the PGIM Global Corporate ESG Bond Fund.
Kimberly LaPointe, head of PGIM Investments’ international business, said: “Drawing on the active management expertise of PGIM Fixed Income, we are pleased to offer a flexible, global, multi-sector bond fund with an emphasis on holdings in higher-rated ESG issuers. While ESG factors are already integral to PGIM Fixed Income’s investment process, this fund, with its explicit ESG investment objective, adds to our suite of active fixed income solutions.”
The PGIM Global Total Return ESG Bond Fund is a sub-fund of the Irish-domiciled UCITS fund umbrella, PGIM Funds plc. It will initially be registered for sale in Denmark, Norway, Sweden, UK, Germany, Austria, Netherlands, and Switzerland.
BNPP AM restructures fund to focus on social inclusion
24 February 2021
BNP Paribas Asset Management (BNPP AM) has unveiled a fund investing in companies with a proactive approach to reducing social inequalities.
The group has restructured its Human Development Fund and renamed it as the Inclusive Growth Fund amid a shift to focus on reducing inequalities in income, education, gender, ethnicity, geographic origin, age or disability.
It has adopted a proprietary Inclusion Score to rate companies out of 100 to create a concentrated portfolio of 40 to 60 equities. It incorporates an enhanced weighting for social factors, which account for 65% of the overall score, compared to 20% for governance criteria and 15% for environmental. Companies that score below 20 are automatically excluded from the investment portfolio.
The investment strategy is based on five key social challenges identified as major causes of inequalities:
• protecting the most vulnerable members of society
• promoting social mobility
• developing a quality offering accessible to the greatest number of people
• respecting business ethics
• promoting decarbonisation and biodiversity
Managers of the Inclusive Growth Fund, Maria Luz Diaz Blanco and Anne Froideval, commented: “By integrating specific performance indicators, such as employee turnover rate or board diversity, our proprietary model allows us to filter the investment universe to identify the leaders. Our approach means that we can build a high conviction equity portfolio of 40-60 stocks from around 1,000 companies initially analysed. This allows us to meets the expectations of our clients who are looking to generate a positive impact on tomorrow’s society while generating long-term value.”
Amati launches specialist metals fund
24 February 2021
Amati Global Investors has launched fund investing in precious metal companies adopting a ‘Clean Trade’ approach.
Demand for specialist metals is anticipated to grow as the world transitions to a lower carbon economy and move away from fossil fuels. Amati gave examples as copper, which is used for power grid infrastructure as well as energy storage for industrial use, and battery technology which is dependent on lithium and electrification dependent on both nickel and copper.
Amati Founder and CEO, Dr Paul Jourdan added although many investors see metal mining as a “dirty business” big changes are occurring in terms of emissions and employment practices, with many companies making a positive impact on local communities through their environmental and education programmes, and there is also a new emphasis appearing on lowering the carbon footprint of metal production.
“The TB Amati Strategic Metals Fund will adopt a ‘Clean Trade’ approach [Jourdan is a Trustee of the charity], so if a country lacks so many of the basic freedoms that we cannot see the beneficial impact of a mine on the wider community offsetting the potential harm caused by the implicit funding of an oppressive government via taxes, we will not invest. This is an approach that we are hoping will be adopted by investors on a wider scale.”
The TB Amati Strategic Metals Fund will hold 35-45 positions and be benchmarked agains the EMIX Global Mining Index. It will be managed by Georges Lequime and Mark Smith of UK-based London Investment Consultants.
New RM Funds impact credit fund targets £200m
22 February 2021
Alternatives asset manager RM Funds has launched a new impact credit fund aiming to raise up to £200m.
RM Impact Credit Fund (RM ICF) will fund UK businesses that make positive contributions to ESG outcomes linked to the UN Sustainable Development Goals. These funds will be offered through the provision of non-benchmark sized loans worth up to £15m, focusing specifically on social infrastructure and environmental infrastructure themes.
For example, the fund aims to improve the supply of quality affordable housing and accommodation; childcare and education services; health and social care, and the availability of energy, recycling, waste and sustainable water solutions and the sustainability of buildings and transport.
CIO James Robson said: “Despite being one of the world’s most advanced economies, the UK faces a range of pressing social and environmental challenges, not least arising out of growing social and economic inequality, meaning many people and parts of the UK are at risk of being ‘left behind’.
“There are many businesses across the UK which are still underserved by traditional lenders, with borrowing requirements that are too complex for traditional bank lending and too small for institutional direct lending. We are delighted to launch the RM Impact Credit Fund to fill this significant funding gap.”
The fund will actively engage with company management teams, use a positive screening process, and track impact metrics. Alongside the use of SDGs, the fund will have an impact scoring system aligned with recognised global standards and initiatives, including the Principles for Responsible Investment and the Impact Management Project.
RM Funds has partnered with The Good Economy (TGE) to provide third-party assurance of the Impact Management and Measurement framework. TGE will also report annually to investors to provide an independent view of the fund’s impact performance.
Robson added: “In addition to implementing a variety of investment protocols to protect our investors, we will also hold the fund accountable in upholding clear ESG standards; whether through our direct engagement with management teams, our use of SDGs through the positive screening process and the IMM scoring system, or our partnership with The Good Economy.”
LGIM adds to ESG bond range
18 February 2021
Legal & General Investment Management (LGIM) has launched a new green bond ETF.
L&G ESG Green Bond UCITS ETF tracks the J.P. Morgan ESG Green Bond Focus Index, which aims to provide exposure to green bonds issued across hard currency, credit and local currency government bonds. The fund incorporates a focus on green bonds that have been reviewed independently by the Climate Bonds Initiative. The portfolio of global constituents has an average credit rating of A+.
The fund also uses an ESG scoring and screening methodology, and allocates more money towards issuers ranked higher on ESG criteria and ‘Certified Climate Bond’ issues and invests less money in green bond issues that have not been reviewed independently. The range also excludes the lowest scoring bond issuers and certain industries such as controversial weapons manufacturers, thermal coal miners, tobacco companies, oil sands (from March 2021) and violators of the UN Global Compact.
The fund adds to the L&G ESG USD Corporate Bond UCITS ETF and L&G ESG Emerging Markets Corporate Bond UCITS ETF, which were both listed in January 2021. These three new ETFs have been designed for UK and European wholesale and institutional investors and are listed on the London Stock Exchange, Borsa Italiana and Deutsche Boerse.
LGIM said the eight funds in the range ‘address investors’ increasing need to gain exposure to core fixed income assets with ESG and liquidity considerations integrated into the investment design’.
Howie Li, head of ETFs at LGIM, added: “As with the rest of the range, we have designed these new ETFs to be portfolio building blocks that answer to investors’ increasing call for ESG integration and liquidity considerations.
“As questions mount on how ‘green’ some bond issues in the market may be, the incorporation of the Climate Bonds Initiatives certification process into the design means that we can direct more of an investor’s money towards green projects that have been independently verified.”
Key product details:
|Fund name||Index||ISIN||TER||Currency||Ticker and Exchange|
|L&G ESG Green Bond UCITS ETF||J.P. Morgan ESG Green Bond Focus Index||IE00BMYDMD58||0.25%||GBP||LSE – GBND LN Borsa Italiana – GBND IM Deutsche Börse – GBNB.DE|
|L&G ESG Emerging Markets Corporate Bond (USD) UCITS ETF||J.P. Morgan ESG CEMBI Broad Diversified Custom Maturity Index||IE00BLRPQP15||0.35%||EUR |
|Borsa Italiana – USDC IM |
Deutsche Börse – USAB GY
LSE – USDC LN
LSE – USDC LN
|L&G ESG USD Corporate Bond UCITS ETF||J.P. Morgan Global Credit Index (GCI) ESG Investment Grade USD Custom Maturity Index||IE00BLRPRD67||0.09%||GBP||LSE – USDG Borsa Italiana – USDC Deutsche Börse – USAB|
7IM offers advisers ESG options with responsible model portfolio range
16 February 2021
7IM has upped its ESG offering for advisers by launching Responsible Choice Model Portfolios.
The five portfolios range in risk from cautious to adventurous and are focused on investments that score well on ESG factors, companies that can have long-term positive impacts, and will minimise exposure to controversial activities such as armaments, tobacco and thermal coal.
Verona Kenny, managing director of intermediary at 7IM said: “Green recovery and governance issues are quite rightly high on the global agenda, and the 7IM Responsible Choice Model Portfolios are designed to embrace the opportunities here and offer advisers an avenue to invest along sustainable lines, without having to sacrifice performance.”
The 7IM Responsible Choice Model Portfolios will charge an annual management fee of 0.30%, with the ongoing charges of underlying holdings of around 0.40%. The new models are currently only available on the 7IM platform but will be available on third-party platforms in the near future.
Manulife Sustainable Asia Bond Fund now available in Europe
15 February 2021
Manulife Investment Management has launched it Sustainable Asia Bond Fund in Europe.
Manulife Global Fund (MGF) Sustainable Asia Bond Fund makes use of the firm’s proprietary Asian credit research and ESG capabilities to select issuers to outperform traditional Asian bond peers.
The MGF Sustainable Asia Bond Fund is led by Murray Collis, deputy CIO, fixed income, Asia ex-Japan, and supported by the management team of Endre Pedersen, Alvin Ong, Jimond Wong and Neal Capecci.
The firm said sustainability of business in Asia is increasingly important to various investors and stakeholders, creating compelling opportunities for investment across Asia-Pacific markets.
“Sustainable and responsible investing is fast becoming one of the most important investment criteria globally,” said Pedersen.
The fund is domiciled in Luxembourg, and is available in Europe alongside two other Lux-based UCITS funds: MGF Dragon Growth Fund and MGF Asia Total Return Bond Fund.
Andrew G. Arnott, head of wealth and asset management at Manulife Investment Management, United States and Europe, said: “We are excited to launch a fund that combines two of our strongest capabilities for clients who have interest in Asia and ESG integration in fixed income. Additionally, the availability of MGF Dragon Growth fund and MGF Asia Total Return Bond fund now offers a regional product suite for European investors looking to add diversity and exposure to their portfolio.”
The three funds are currently registered for sale in the UK, Germany, and Italy. Manulife Investment Management expects to file in Switzerland in the near term.
Amundi launches EM green bond fund
15 February 2021
European asset manager Amundi has launched an open-ended emerging markets green bond strategy offering investors yield potential from emerging market debt while supporting the energy transition in countries where it is most needed.
The Amundi Funds Emerging Markets Green Bond Fund has launched to retail and institutional investors seeking exposure to green bonds issued in hard currency, primarily by corporates as well as some sovereigns, in selected emerging markets, such as Brazil, India, China, and Indonesia.
It is run by Amundi’s emerging markets team with Maxim Vydrine, co-head of emerging markets corporate & high yield debt as lead portfolio manager, supported by Sergei Strigo and Paolo Cei as Co-portfolio managers. There will also be input from the EMs credit research and ESG analysis teams.
Amundi said it will seek to take advantage of the growth in green bonds, which saw a record $52bn of issuance in 2019, with total issuances reaching $24bn.
Yerlan Syzdykov, head of emerging markets at Amundi, said: “Investors are increasingly looking for solutions that deliver yield and have a positive impact on the environment. Emerging market green bonds are particularly well suited to capturing both of these opportunities. We have already seen that 2019 was a vintage year for the global green bond market, and emerging market green bonds in particular are growing rapidly.”
Baillie Gifford launches positive change investment trust
11 February 2021
Baillie Gifford has launched the Keystone Positive Change Investment Trust, formerly known as the Keystone Investment Trust.
The trust aims to outperform the MSCI AC World Index and deliver positive change in areas such as healthcare, education, social inclusion and the environment. As at 31 December 2020, the trust’s assets were £239m.
The trust will be managed by Kate Fox and Lee Qian, assisted by senior impact analysts Michelle O’Keeffe and Ed Whitten. This team also manages the £1.99bn Baillie Gifford Positive Change Fund, which launched in January 2017.
The Keystone Positive Change Investment Trust is being transitioned in line with the Baillie Gifford Positive Change Fund, but will differ from the fund over time by incorporating private company investments and some smaller listed holdings.
James Budden, director of retail marketing at Baillie Gifford, said: “The alignment of Keystone with our positive change philosophy provides a compelling opportunity to access exceptional growth companies which are also contributing towards a more sustainable and inclusive world.”
JOHCM hires Fidelity duo for sustainable water fund launch
12 February 2021
Regnan, the responsible investment management business affiliated with J O Hambro Capital Management (JOHCM), has announced the launch of a global equities sustainable water and waste investment strategy later this year.
It has hired two fund managers, based in the JOCM London office from April, from Fidelity International to run the fund: Bertrand Lecourt, is joining as senior fund manager, and Saurabh Sharma as fund manager. The pair currently manage $2.5bn of assets within a sustainable water and waste strategy, including the $2.4bn Luxembourg-domiciled Fidelity Funds – Sustainable Water & Waste Fund and a $88m UK-domiciled OEIC fund. Both funds invest in companies involved in the design, manufacture or sale of products and services used in the water and waste management sectors, said Regnan.
Alexandra Altinger, JOHCM CEO – UK, Europe & Asia, commented: “We are thrilled that Bertrand and Saurabh are joining Regnan and the wider group to launch our first thematic sustainable investment strategy. Their decision highlights the attractions of Regnan’s responsible investment pedigree and the value of its unique sustainability research platform. The team’s appointment demonstrates our ability to attract superior talent and progresses Regnan’s plans to become a global leader in the provision of responsible investment strategies and solutions.”
Before joining Fidelity, Bertrand worked as a portfolio manager at Polar Capital and founded Aquilys Investment Management. Meanwhile, Sharma held equity research analyst roles at Moody’s Analytics and GlobalData prior to joining Fidelity.
RLAM launches Global Sustainable Credit Fund
12 February 2021
Royal London Asset Management (RLAM) has added a Global Sustainable Credit Fund, managed by Rachid Semaoune, to its sustainable investment range.
It will seek to exploit inefficiencies across global credit markets by creating a portfolio diversified by geography, currency, sector and issuer.
RLAM said the fund launches with £125m in assets under management and seeks total return over the medium term with a typical horizon of three to five years. The fund’s investment objective is to outperform the Bloomberg Barclays Global Aggregate Corporate Total Return Index Hedged USD by 0.75% per annum over rolling three year periods, gross of fees.
Portfolio manager Semaoune commented: “We see significant opportunities to help asset owners meet their long-term goals by gaining access to the full, diverse opportunity set within global credit markets via a robust approach that puts sustainability right at the heart of portfolio construction.”
First Sentier brings responsible infrastructure fund to UK range
11 February 2021
Australian asset manager First Sentier Investors is launching a UK-domiciled Responsible Listed Infrastructure Fund.
Managed by Rebecca Myatt in Sydney, the fund will invest in a diversified portfolio of global listed infrastructure stocks that are actively contributing to sustainable development within a framework of good corporate governance.
It will also seek to invest in companies that can contribute towards or benefit from the UN Sustainable Development Goals (SDGs), such as those delivering affordable clean energy to the communities they serve.
Myatt said: “It is our view that infrastructure companies are leading a global shift to cleaner energy, next-generation transport networks and increasing mobile connectivity. Infrastructure assets are large scale, long life, tangible assets that have significant environmental footprints and social licenses to operate.”
LGIM brings hydrogen ETF to European market
10 February 2021
Legal & General Investment Management (LGIM) has added another thematic ETF to its range with the launch of the L&G Hydrogen Economy UCITS ETF.
The group said this will track the benchmark of the Solactive Hydrogen Economy Index NTR to offer investors exposure to the long-term investment opportunity offered by the transition to a low-carbon, hydrogen economy, such as technologies and firms that are enabling the production of cheaper, clean forms of hydrogen, as well as those that are expected to play an integral role in the hydrogen economy.
See also: – UK must balance old and new energy to reach COP26 goals
Companies will have a minimum market cap of $200m and can include electrolyser manufacturers, hydrogen producers, fuel-cell manufacturers, specialist mobility providers, fuel-cell component suppliers, key industrial and utility companies, and others in the supply chain.
Howie Li, head of ETFs at LGIM said: “Access to clean hydrogen will be key to lowering emissions in harder to abate industries where electrification alone is not enough. The commitments being made to the hydrogen economy by governments and businesses around the world are creating long-term investment opportunities with short-term catalysts.
“This fund offers investors early access to this fast evolving industry and allows investors the ability to control the amount of hydrogen exposure into their portfolio alongside our clean energy and battery ETFs. As a package, the hydrogen ETF will complement these other two funds to provide investors with the ability to capture growth to be found in clean energy generation and energy storage.”
The strategy, which LGIM said is the first of its kind in Europe, is listed on the London Stock Exchange, Deutsche Boerse, Borsa Italiana, Six Swiss Exchange and the NYSE Euronext, and is available to UK and European intermediary and retail investors. It carries a TER of 0.49%.
It sits within LGIM’s existing suite of sustainable thematic ETFs, such as the L&G Clean Energy UCITS ETF and the L&G Battery Value-Chain UCITS ETF.
Amundi launches ESG Improvers range
10 February 2021
Amundi has unveiled two equity products as the starting blocks of its new Amundi Funds ESG Improvers Range, providing access to the “ESG champions of tomorrow”.
The suite will feature actively managed portfolios that aims to capture ESG-related growth potential at an early stage.
The first two funds are the European Equity ESG Improvers and Pioneer US Equity ESG Improvers, benchmarked against the MSCI Europe Index and the S&P 500 Index respectively.
Along with any future products added to the range, these will exclude companies that are not aligned with Amundi’s ESG framework, and select companies that are fundamentally attractive and showing real and material progress on ESG. The fund management team will also engage with company management throughout the investment process to understand and positively impact the company’s financial and ESG credentials as a whole, the group said, and build a portfolio of concentrated, high conviction holdings.
See also: – Rules of engagement: What constitutes best practice?
Vincent Mortier, deputy CIO at Amundi, commented on the launch: “ESG Improvers is a new concept that Amundi has developed which leverages our strength across various teams and locations. It offers investors an opportunity to be part of an actively managed portfolio of tomorrow’s ESG winners. This fundamental bottom up concept is designed to offer attractive risk adjusted returns and to encourage companies to improve the ESG credentials.”
Foster Denovo launches sustainable passive MPS
10 February 2021
Financial advisory firm Foster Denovo has added a passive range to its Sustainable Dynamic Portfolios offering a lower cost choice for UK investors.
The new range will consist of five portfolios constructed around different levels of risk, and will be invested in physically backed ETFs that exclude companies without clear ESG practice. The firm said each portfolio will be subject to rigorous ongoing investment and sustainability risk assessments, led by independent external experts including sustainable and impact investing fund research specialists, Worthstone, as well as Foster Denovo’s head of investment research, Declan McAndrew.
See also: – Are ESG ETFs part of the solution?
McAndrew said: “Within this new range, as within our Active SDPs, we have focused on combining internal and external expertise to build portfolios that will proactively adapt to this rapidly changing and exciting field.
“This new launch will allow us to cater to an even broader range of investors who are looking for investment portfolios that can manage risk, while also delivering aspirational outcomes that reflect their financial objectives.”
Roger Brosch, CEO at Foster Denovo, added: “Adding the passive options to our Sustainable Dynamic Portfolios range will provide a complementary low-cost choice for investors seeking asset growth, whilst managing the risks from ESG factors.”
Ossiam launches smart beta biodiversity ETF
10 February 2021
Smart-beta specialist Ossiam, an affiliate of Natixis Investment Managers, have launched Ossiam Food for Biodiversity UCITS ETF, on the Xetra exchange in Germany.
The group said if there is further demand for the product it will be launched on the London Stock Exchange.
See also: – Investors are marrying ESG with smart beta
Taking an active quantitative approach to tackling global biodiversity loss, the strategy aims to achieve a “substantial and quantifiable reduction in the biodiversity footprint of the food and agriculture sector”.
Using the Corporate Biodiversity Footprint developed by Iceberg Data Lab, it captures the most material impacts of food companies and their value chain on ecosystems, the firm said. Therefore, the portfolio’s make-up typically leads to a fund with a 99% reduction in negative biodiversity impact, which is equivalent to saving 218 km² of pristine habitat for $100m invested, compared to an investment in the benchmark investment universe.
“The Corporate Biodiversity Footprint allows investors to assess corporates through their primary social contribution, food production and distribution, and their environmental impact notably the change of land use and contribution to deforestation,” according to Matthieu Maurin, CEO and co-founder of Iceberg Data Lab.
Ossiam has also implemented a dedicated engagement policy for this ETF where the analysts will engage with selected companies in the portfolio to make sure they identify, plan and pursue outcomes aiming to:
- Ensure the preservation and sustainable use of ecosystems
- Mitigate the impact companies have on biodiversity and prevent the extinction of threatened species
- Integrate climate change measures into policies, strategies, operations and products
This team will also using its shareholder votes on actions regarding climate.
Bruno Poulin, CEO of Ossiam, said: “To address the increasing destruction of our natural environment, all sectors of the economy must contribute in numerous ways before it is too late. The earth’s population is predicted to reach about 11 billion by the end of this century, but if current food production methods and diets are not drastically improved, there are likely to be calamitous environmental, social and political outcomes.
“Mobilising capital and engaging with companies in the broad food and agriculture sectors is one way of making a positive contribution to the immense environmental challenges facing humanity now.”
Astia launches $100m VC fund targeting senior women
8 February 2021
Silicon Valley-headquartered investment organisation Astia has launched a $100m early-stage venture capital fund targeting companies with women in founding or executive roles.
According to Astia, last year less than 9% of venture capital was invested into companies that included women anywhere in the founding or leadership team, less than 2% was invested into women CEOs. The Astia Fund will invest globally in high-growth companies that have at least one woman in an executive, equity-holding position.
“There is a great deal of talk about inclusion and women within venture capital, but VCs need to do what they do best – invest,” said Sharon Vosmek, CEO of Astia.
“With this new fund, Astia systematically invests in under-invested, yet outperforming companies – where women are rightly in positions of power, equity and influence. Not just because it’s the right thing to do, but because it creates better companies and delivers stronger returns.”
The fund is led by an investment from Mastercard, and also includes investment from: Priya Mathur, past president of the board of CalPERS; Jim O’Neill former chief economist and former chairman of Asset Management at Goldman Sachs; Farvatn Venture; Portola Creek Capital; Tides Foundation; and members of Toniic, a global network of impact investors.
Ann Cairns, executive vice-chair of Mastercard, said: “I am proud Mastercard is the lead investor in Astia’s first venture fund. Too much of our world was designed without women in mind – and without women involved. Even today, inequality and exclusion still hold women back. That’s why Mastercard is forging ambitious partnerships and championing the people, businesses and innovations that are transforming the way our world works. When women and underrepresented groups are at the leadership table these teams outperform for customers, investors and companies.”
GAM launches sustainable EM bond strategy
8 February 2021
GAM Investments has launched a sustainable local emerging market bond strategy, the first in a range of sustainable strategies planned for this year.
It will typically have active exposure to 15-25 emerging and frontier markets, centred upon approximately 10 very liquid core markets and 100-150 bonds and FX forwards.
Stephanie Maier, global head of sustainable and impact investment at GAM, said: “We are listening to the clear client demand for more strategies focused on sustainable investing and are delighted to be working in partnership with our clients to develop these. Later this year, we plan to launch additional ESG-focused products, further building on our award winning Swiss Sustainable Companies strategy, which has a track record of more than 20 years.”
The strategy’s investment approach combines a positive tilt towards sovereigns with higher ESG scores, as defined by its benchmark, the JP Morgan ESG GBI-EM GD Index, with the team’s proprietary investment process incorporating ESG factors for active allocation within the index tilts. The JP Morgan ESG GBI-EM GD Index leverages research from both Sustainalytics and RepRisk.
The emerging market debt team, led by investment director Paul McNamara, will assess developments in the ‘big three’ global economics (the US, Europe and China) to establish three-to-five top-down global themes, which determine country selection, along with specific return and risk driver preferences. Country analysis is then performed using the team’s proprietary ‘Crisis Cycle Filter’, which captures the interaction between core ESG factors and nine traditional macroeconomic variables considered to be highly reliable, early indicators of financial crises, such as falling FX reserves or rapidly rising inflation.
McNamara said: “We have taken ESG factors into account in our investment process for our local emerging bond strategy for a number of years, purely for their impact on risk-adjusted returns. However, as ESG factors become more efficiently priced in the sovereign debt market, we believe that now is the time for a strategy that targets both a specific ESG tilt and integrates ESG factors from a risk/return perspective.”
ASI and The Big Issue launch climate solution multi-asset fund
1 February 2021
Aberdeen Standard Investments (ASI) has launched the Multi-Asset Climate Solutions (MACS) Fund in partnership with The Big Issue Group .
MACS will invest in renewable energy, electric vehicles, smart working, energy efficient buildings and other green technologies. Companies whose products, such as these, help mitigate climate change are expected to grow as the world shifts towards net-zero carbon emissions.
The fund will be managed by lead fund manager, Craig Mackenzie, head of strategic asset allocation; Chris Paine, investment manager; and Fiona Ritchie, ESG investment manager, multi-asset solutions.
Mackenzie said: “We have searched the globe to find companies whose products drive the shift to a zero-carbon green economy. Our multi-asset approach diversifies risk across asset classes, allowing our customers to put their money to work financing the climate transition with less volatile investment returns.”
In 2018 ASI was one of the fund managers to join The Big Issue to launch its investment platform The Big Exchange, on which the fund will be available after it has been assessed. ASI has committed to sharing 20% of the net revenue generated by the MACS fund to support The Big Issue’s social causes.
See also: – Top fund groups launch retail impact platform
Nigel Kershaw OBE, chair of The Big Issue Group, said: “The Big Issue’s mission is to build a world that works for everyone, for now and for future generations. This fund is a natural extension of our mission, given that the negative effects of climate change are likely to have a disproportionate impact on vulnerable people across the world. We are proud of our partnership with Aberdeen Standard Investments and are excited to bring such an innovative product to market.”
ASI has selected FTSE Russell as its climate solutions data provider. ASI will use FTSE Russell’s industry leading new Green Revenues 2.0 data model, which measures the green revenue exposure of portfolio companies to comply with the incoming EU Taxonomy. The regulation defines those economic activities that play a key role in the transition to the green economy.
Arne Staal, global head of research and product management and FTSE Russell, said: “We are delighted that ASI has selected our Green Revenues 2.0 data for the launch of its innovative new Multi-Asset Climate Solutions fund. ASI has been early to recognise that green revenues data used to quantify a fund’s alignment to the green economy will be essential in complying with the incoming EU Taxonomy disclosure requirements for sustainable investment products by the end of 2021.”
Paraguay forestry fund launches
28 January 2021
Real assets investor Astarte Capital Partners and Stockholm-based forestry development company SilviPar have launched a new investment platform dedicated to sustainable forestry, with an immediate focus on Paraguay.
The SA Impact Forestry Fund will acquire, develop and manage new and existing forest assets. It will focus on acquiring low productivity farmland and converting it into a sustainable, cost-efficient forestry portfolio. The fund is positioned to capitalise on strong macro-economic tailwinds, producing wood for the global fibre and pulp markets, and generating new credits for the carbon offset market.
It hopes to make a significant impact by helping to stimulate local economic activity, decrease the use of fossil-based products and the deforestation of natural rainforest, by providing more sustainable and bio-based alternatives.
Astarte is providing seed capital to the fund and will act as the investment adviser. SilviPar is providing the fund’s seed assets and will manage the portfolio, with responsibility for the forestry strategy and day-to-day operations.
Jersey Finance launches wildlife fund
21 January 2021
Jersey Finance has launched a fund with the objective of protecting wildlife and rewilding ecosystems around the world.
Jersey Fund for a Wilder World is designed to give financial services firms – initially administrators, law and accountancy firms – in Jersey the opportunity to contribute a portion of their fees earned from sustainable finance workflows to a pooled central pot.
Elliot Refson, head of funds, Jersey Finance, said: “I’m particularly pleased to be working with Durrell, which has such strong roots in Jersey but expertise and a reputation that extends right around the world, and to have already had such strong support from firms here in Jersey. This fund provides a fantastic opportunity for firms in Jersey to make a combined, clear and positive difference to natural environments around the world.”
Launched in conjunction with Durrell Wildlife Conservation Trust, the fund will contribute towards Durrell’s ‘Rewild our World’ strategy, which undertakes projects aimed at reviving, restoring and rewilding diverse habitats around the world.
Lesley Dickie, CEO at Durrell, said: “Through the Rewild our World initiative, we have set our sights on delivering significant change to the fortunes of threatened wildlife through a positive and bold vision for conservation. By bringing together our own knowledge and experience of global conservation with the international expertise of Jersey’s financial services industry, this fund can play an important role in realising our long-term goals.”
Tim Morgan, chair of the Jersey Funds Association, said: “Reflecting our ambitions to support and house cross-border ESG investment, our industry is overwhelmingly supportive of this fund, which has the potential to make a real difference around the world.”
T Rowe Price launches first UK responsible equity fund
18 January 2021
US asset manager T Rowe Price has launched its first dedicated UK investment strategy.
The T. Rowe Price Funds OEIC – Responsible UK Equity Fund excludes companies involved in an extreme ESG breach that are not taking steps to remediate the issue. It will typically hold 85% of its 40-60 positions in companies described as durable compounders, with the remainder of the portfolio exploring companies on a path to improving cash flow and returns.
The fund, managed by Mitchell Todd, also utilises the group’s Responsible Investing Indicator Model (RIIM), which helps to screen the investment universe for responsible investing risks and opportunities and can help manage overall portfolio exposure to responsible investments.
“The launch of T Rowe Price’s first dedicated UK strategy further demonstrates our ambitions in the UK. We are extremely pleased with the ongoing development of our OEIC range, alongside the continual strengthening of our client service capability across all investor segments,” John Yule, head of UK and Ireland at T Rowe Price, said.
“T Rowe Price is renowned for fundamental bottom-up research and investors in this strategy will also benefit from a responsible investment framework – which assists in the identification of corporates on the right side of change.”
Rathbones plans to launch sustainable multi-asset portfolios
18 January 2021
Rathbones plans to launch a new rage of four risk-rated, risk-targeted, sustainable investment funds in the first half of this year.
The Rathbone Greenbank Multi-Asset Portfolios (RGMAPs) will invest directly around the globe using a combination of government bonds, supra-national bonds, corporate bonds, listed company shares, structured products and derivatives, and will sit in the IA Volatility Managed sector.
The funds will be managed by Rathbones’ multi-asset team, comprising David Coombs, head of multi-asset investments, and Will McIntosh-Whyte, who will be responsible for the day-to-day investment of the portfolios.
McIntosh-Whyte said: “These funds feel like a natural progression for us, given our in-house expertise. We are focused on providing very clear parameters around all the funds in order that clients can have confidence in choosing the most suitable option within our range and enabling them to invest in line with their sustainability objectives without foregoing financial disciplines”.
The funds will be supported by Rathbone Greenbank Investments, Rathbones’ specialist ethical, sustainable and impact research and investment team, as well as Rathbones’ fixed income and equity analysts. Greenbank can veto investments that do not meet the funds’ responsible investment policy.
Mike Webb, chief executive, Rathbone Unit Trust Management, said: “Subject to regulatory approval, these new multi-asset funds will be able to map into advisers’ investment processes across most client risk appetites, and with the industry-leading ethical and sustainable oversight of Greenbank as an authentic, independent arbiter. We believe that this strong collaboration ensures the integrity that our clients have come to expect of us.”
The new multi-asset range will complement Rathbones’ existing sustainable equity offering, the Rathbone Global Sustainability Fund, managed by David Harrison, which will offer advisers a higher risk solution invested 100% in equities. Its benchmark is the FTSE World Index. Subject to regulatory approval, the name of the Rathbone Global Sustainability Fund will be changed to the Rathbone Greenbank Global Sustainability Fund. There will be no change to the investment process or fund manager. The recommended holding period remains five years.
The new range will employ the same negative and positive criteria as the Rathbone Global Sustainability Fund for its exposure across equities and corporate bonds*.
The new range will offer investors the option of the following risk strategies:
|RMAP* strategy (*Rathbone Multi Asset Portfolios)||RGMAP strategy||Target return / Vol. target (% of FTSE Developed Index)||Risk level||Recommended holding period|
|RMAP Total Return||Rathbone Greenbank Total Return Portfolio||Bank of England base rate + 2% Vol. target <33%||Lower||3 years|
|RMAP Defensive Growth||Rathbone Greenbank Defensive Growth Portfolio||CPI + 2% Vol. target <50%||Lower-to- medium||5 years|
|RMAP Strategic Growth||Rathbone Greenbank Strategic Growth Portfolio||CPI + 3 Vol. target <66%||Medium||5 years|
|RMAP Dynamic Growth||Rathbone Greenbank Dynamic Growth Portfolio||CPI + 4 Vol. target <83%||Medium-to-higher||5 years|
The charges on the new funds are expected to be as follows:
|Fund name||Share classes||Unit types||Currency||Launch price||AMC||Estimated OCF (UCIT)|
|Rathbone Greenbank Total Return Portfolio||S-class||Income and Accumulation||GBP||£1.00||0.50%||0.67%|
|Rathbone Greenbank Defensive Growth Portfolio||S-class||Income and Accumulation||GBP||£1.00||0.50%||0.71%|
|Rathbone Greenbank Strategic Growth Portfolio||S-class||Income and Accumulation||GBP||£1.00||0.50%||0.65%|
|Rathbone Greenbank Dynamic Growth Portfolio||S-class||Income and Accumulation||GBP||£1.00||0.50%||0.75%|
The minimum holding across all funds is £1000, with subsequent investments of a minimum of £500.
To support the launch, Rathbones expects to hire an assistant into the team, an investment specialist, as well as additional analysts to support the research, ideas generation, and client communications associated with the funds.
Two Mirabaud strategies receive SRI label
14 January 2021
Mirabaud Asset Management has received the SRI label for its two global equity strategies: the Mirabaud – Sustainable Global Focus Fund and the Mirabaud – Sustainable Global High Dividend Fund.
The SRI label was created and is supported by the French Ministry of Finance. It follows a set of rigorous criteria to demonstrate the systematic and measurable integration of extra-financial and ESG analysis in investments. These two funds join the Mirabaud – Sustainable Global Convertible Bond Fund in having been awarded this SRI label.
Hamid Amoura, head of responsible investment at Mirabaud Asset Management, said: “Obtaining this label reflects our continuous commitment to responsible investment and our ambition to strengthen Mirabaud Asset Management’s positioning in terms of sustainability and responsibility.”
Anu Narula, head of global equities at Mirabaud Asset Management said: “It’s great to receive this label in recognition of our robust ESG processes in our global equity franchise. As active, engaged managers, we believe there is no substitute for in-depth, bottom-up company research and ongoing active engagement with companies. This deep due diligence is essential to gaining insights into a company’s management quality, business strategy and potential risk exposure.”
Invesco launches Japan and Pacific ESG ETFs
11 January 2021
Invesco has expanded its ESG ETF range with two new funds investing in Japan and Pacific ex Japan.
The Invesco MSCI Japan ESG Universal Screened UCITS ETF and Invesco MSCI Pacific ex Japan ESG Universal Screened UCITS ETF will track the performance of the customised versions of the MSCI ESG Universal indices. These are constructed from the parent MSCI indices by excluding any stock that is involved in controversial, conventional or nuclear weapons, civilian firearms, oil sands, thermal coal, tobacco or recreational cannabis. Any company that has faced severe controversies over ESG issues in the past three years or has a very low MSCI ESG score is also removed from the index. The remaining stocks are reweighted by the product of their ESG scores, ESG trend scores and market capitalisation.
Gary Buxton, head of EMEA ETFs and indexed strategies at Invesco, said: “With 60% of all equity ETF flows last year going into funds with an ESG objective, demand is clearly strong. We believe ESG will be embedded even more broadly into portfolios with investors no longer needing to sacrifice their investment objectives to follow their principles.
“Our suite of MSCI ESG Universal ETFs offers investors low-cost tools to construct diversified equity portfolios. We will continue building out our ESG offering in response to market opportunities and driven by investor demand.”
Listed on the London Stock Exchange, the ETFs carry an ongoing charge of 0.19% per annum and are trading n US dollars.
Chris Mellor, head of EMEA ETF equity and commodity product management at Invesco, added: “Different investors will often vary in their objectives, and this is most evident in the ESG space. Generally speaking, the more you exclude from an index, the more likely the performance will deviate from the base index. While that is acceptable for some investors, it’s not for others. Many want to reduce their portfolio’s carbon footprint and improve other ESG characteristics but at the same time maintain their overall risk and expected returns. We designed these ETFs to provide investors with materially significant ESG improvements for their core equity exposure.”
EIS fund launched to back early-stage environmental firms
11 January 2021
Venture capital firm OnePlanetCapital has launched a specialist sustainability EIS fund investing in companies that have a positive environmental impact.
It will focus on three interrelated areas; climate change, the environment and consumer sustainability, all underpinned by an ESG framework looking at environmental impact, social purpose and corporate governance in its investee companies.
For climate change, the OnePlanetCapital Sustainable EIS Fund will focus on companies taking steps to tackle emissions, i.e. through renewable energy, energy efficiency & transport. Secondly, it will raise capital for “companies of the future” with a positive environmental impact including agricultural technology, pollution management or biodiversity, and lastly, for consumer sustainability, it will invest in food companies that reduce climate change and environmental impact, for example or fashion companies that reduce C02 emissions and pollution, or businesses in the recycling space.
Matthew Jellicoe, co-founder of OnePlanetCapital, commented: “In 2019, the UK became the first major economy to pass laws to end its contribution to global warming by 2050. This target requires a paradigm shift in the UK economy and enormous amounts of investment into the businesses of the future.
“Unprecedented change is required to our global economy. We are on the verge of a green industrial revolution and the world is waking up to the substantial changes needed to tackle the climate issues we face. This has been amplified by numerous lockdowns over the last 11 months which have underlined the fragility of the world as we know it. Decarbonisation is now being backed by all major developed economies including the US and China and huge amounts are being invested in green energy, green technology and services. Consumers are also becoming increasingly driven by sustainability and becoming more aware of a business’ green and social purpose credentials.
“We only have one planet and now it’s time to get involved and make a difference for our collective future’’.
“We founded OnePlanetCapital to be more than an investment house. We’re part of a growing, global movement, and are focused on unlocking the positive impact of early-stage companies as they grow. As a team we’re spearheading the green industrial revolution and disrupting the status quo to create a positive global impact.”