In Brief

Pensions ahead of ESG funds on proxy votes

Defined-benefit programs have been more likely to support ESG resolutions

Public pensions are significantly more progressive when it comes to supporting shareholder resolutions that ESG-themed funds, according to analysis by Morningstar.

Last year, there was a record 34% support for ESG resolutions at US public companies. Public pensions voted in favor of ESG resolutions 90% of the time, while the ESG-focused mutual funds and ETFs supported those resolutions 85% of the time, on average, Morningstar found.

The report found six fund providers with higher rates of support for ESG votes than pensions: Amundi US (100%), Xtrackers (100%), Northern Funds (100%), Calvert (99%), American Century (99%) and TIAA/Nuveen (92%). Meanwhile, the report identified several big fund firms that lagged the ESG-focused funds average: BlackRock/iShares (74%), State Street (66%), Vanguard (51%) and Dimensional Fund Advisors (43%).

Compared with general shareholder votes, public pensions were much more likely to support resolutions around ESG governance (93% versus 43%) and worker protection (92% versus 51%), excluding vote results from company insider shareholders. The differences were less pronounced on diversity and inclusion (94% versus 73%) and climate change (86% versus 65%).

The report analyzed data from 72 ESG shareholder resolutions in 2021, with results from a sample of the biggest public pensions in the country, representing about $3.4trn in assets, according to Morningstar. The report used 2021 data, rather than from the current proxy season, as pension plans often have a lag time in reporting how they voted.

MetLife picks up fixed-income impact firm

Affirmative Investment Management has about $1.1bn in assets under management

MetLife Investment Management has made a deal to buy London-based fixed-income impact manager Affirmative Investment Management, the firm announced Monday.

The acquirer, which is the institutional asset management arm of US insurer MetLife, stated that adding Affirmative to its business “will advance MIM’s ESG investment and reporting capabilities as it seeks to deliver client solutions and long-term risk adjusted returns.”

Affirmative reports having more than $1.1bn in assets under management. The firm launched in 2014 and has supported about 2,800 projects through impact bonds in its portfolios, it states on its site. The company will be integrated with MetLife Investment Management’s investment teams following the closing of the sale, which is contingent on regulatory approval. The companies did not disclose the financial details of the pending sale.

“By combining AIM’s expertise with MIM’s commitment to sustainable investing, we will be even better positioned to provide comprehensive insight and counsel to clients and consultants on ESG considerations,” MetLife Investment Management president and MetLife CIO Steven Goulart said in the announcement. “MIM will maintain its fundamental investment processes, and AIM brings us additional capabilities to evaluate sustainability and risk considerations across our core competencies in public fixed income, private fixed income and real estate.”

Calvert snags engagement exec from Federated Hermes

Youmans has a research background, with stints at Harvard and MIT

Calvert Research and Management has hired an executive director of engagement from Federated Hermes’ EOS team, the company announced Thursday.

Tim Youmans, who had been with Federated Hermes since 2018, is based in Boston and reports to Calvert Head of Engagement John Wilson.

In the role, Youmans is tasked with building relationships with firms in the company’s portfolios and working with them to improve ESG performance, according to the announcement.

Prior to working at Federated Hermes, Youmans was a research scholar at Harvard Business School and MIT Sloan School of Management’s family office program.

“Tim’s extensive background in responsible investing advocacy and work as a research scholar establish him as a force for positive change,” Wilson said in the company’s announcement. “Tim built a career leading businesses forward by identifying material changes that propel growth and optimize company infrastructure and culture to allow them to thrive over the long term.”

Direxion preps farming tech, EV ETFs

Rafferty Asset Management will advise the products

Direxion is prepping two ETFs that would invest in companies involved in farming and electric vehicle technology.

The company filed prospectuses Aug. 23 for the Direxion Future of Farming ETF and Direxion Electric and Autonomous Vehicles ETF, which would go live as soon as 75 days afterward.

Both of the index-tracking products would be advised by Rafferty Asset Management, with portfolio managers Paul Brigandi and Tony Ng overseeing them, according to the filing made with the Securities and Exchange Commission.

The Future of Farming ETF would track the S&P Kensho Sustainable Staples Index, investing in US public companies “that enable connected agricultural producers to enhance output while reducing waste and resource exhaustion using state-of-the-art sustainable practices,” the filing states. That also includes securities listed in the S&P Kensho Drones Index, Robotics Index, 3D Printing Index, Genetic Engineering Index and Space Index, along with the Sustainable Farming Index.

The other product, the Direxion Electric and Autonomous Vehicles ETF, would track the Indxx US Electric and Autonomous Vehicles Index. That index includes companies with at least 50% of revenue related to electric or autonomous vehicle manufacturing, infrastructure, such as charging docks or software, and technology.

Calvert files for first ETFs

Morgan Stanley Investment Management will serve as adviser to the funds

Calvert has filed initial registration papers for its first ETFs — a line of products that lists Morgan Stanley Investment Management as the adviser.

The fund provider, which is part of the Morgan Stanley-owned firm Eaton Vance, filed with the Securities and Exchange Commission on Aug. 13 for four products. Those include the Calvert International Responsible Index, US Large-Cap Core Responsible Index, US Large-Cap Diversity, Equity and Inclusion Index and US Mid-Cap Core Responsible Index ETFs.

Each of those passively managed products would track a similarly named index built by Calvert, according to the filing. The ETFs could launch “as soon as practicable” after the effective date of the registration statement. Typically, subsequent prospectus filings known as 485APOS place a start date 75 days afterward.

The products appear to be the first ETFs provided by Calvert, Gabe Denis, the lead Morningstar analyst covering Morgan Stanley, said in an email statement.

“We are seeing many firms enter the ETF space, both to complement (or even replace) existing open-end funds and to launch completely new strategies. The reasons vary and can include wishing to provide a strategy in a potentially more tax-effective (and often cheaper, for investors) vehicle or to appeal to new investor bases and distribution channels,” Denis said. “It will take time to assess how investors react to these new ETFs and how they will sit alongside Calvert’s existing open-end mutual fund offerings.”

Vanguard preps global environmental fund

The active fund will be managed by Ninety One

Vanguard is preparing to launch an actively managed mutual fund that will invest primarily in “environmental companies,” according to a regulatory filing made last week.

The financial giant’s Vanguard Global Environmental Opportunities Stock Fund could go live as soon as November 2 and will be subadvised by Ninety One North America, a subsidiary of the similarly named UK-based firm.

The forthcoming fund will hold about 25 global companies in its portfolio, including those the adviser finds contribute “positively to environmental change.” That is determined by “mapping such company’s revenues to certain industry sub-sectors … aligned to the process of decarbonization,” the initial prospectus states. Those holdings can be related to renewable energy, electrification and resource efficiency, but are not limited to them.

The fund will come in Vanguard’s investor and admiral shares, which have total annual fees of 75 basis points and 60 bps, respectively.

Portfolio managers for the fund will be Ninety One’s Deirdre Cooper and Graeme Baker, according to the filing.