Trust supply glut could threaten Aberdeen Standard fundraise

Fund launched to further delivery of the UN Sustainable Development Goals

A global sustainability trust helmed by Aberdeen Standard Investments could struggle to meet its fundraising goals due to the oversaturation of closed-ended vehicles floating this quarter.

On Monday it was announced that ASI had been selected to manage the Global Sustainable Trust (GST) which will invest primarily in private market investments that are expected to have a positive environmental and social impact.

The GST is targeting a raise of £200m and is expected to begin trading by the end of November.

But Darius McDermott managing director at Chelsea Financial Services suspects the GST could struggle to reach its IPO target given the current supply glut of investment trusts.

There has been a deluge of trust launches over the past month, including funds from heavyweights like Mark Mobius, Terry Smith and Richard Buxton’s newly separated firm Merian Global Investors. Two trusts specialising in private credit from M&G Investments and GCP Asset Backed have been launched within the last week alone.

So far big names haven’t been enough to guarantee funding. McDermott noted that Mobius’ latest venture only raised £100m, falling 50% short of its target.

However, Adrian Lowcock head of personal investing at Willis Owen, thinks the Aberdeen Standard trust has a broader appeal so “is unlikely to put off as many investors” as the Mobius trust, which invests in emerging markets, did.

“The sustainable team is a good one and investors can understand and associate positively with it,” he said. “Even if markets are volatile, a sustainable fund launch sounds like it will be around for the long term.”

But he acknowledged markets can be fickle. “You never know if demand will be there.”

GST deputy chairman Andrew Dykes said Aberdeen Standard beat the competition during the independent tender and selection process because it has one of the largest and most diversified private markets teams globally.

ASI currently has more than £67bn of private investments under management.

The GST portfolio will be primarily invested in private market investments, spanning private equity, real estate, infrastructure, natural resources and private credit.

The independent panel was also swayed by the fund group’s track record of running sustainable investments and closed-ended companies, Dykes said.

The GST is a product of the Global Sustainability Community Interest Company (CIC) which was set up last year to create a closed-end vehicle that would advance the delivery of the United Nations Sustainable Development Goals (SDGs).

Both the trust and Aberdeen Standard will provide investors with regular reports on the actual impact of each investment measured against a framework agreed with the board that will take into account the UN’s 17 SDGs.

Martin Gilbert (pictured), co-chief executive of Aberdeen Standard, said the group was delighted to be appointed investment manager on the GST mandate.

“Given the vital global importance of the United Nations Sustainable Development Goals, this trust is well timed to offer investors access to the potential returns and rewards of those investments helping to create a better world,” he said.

– This article first appeared on ESG Clarity‘s sister site, Portfolio Adviser.