Friday Funds: Article 9 funds outperforming Article 8, Jefferies SFDR analysis finds

Jefferies’ latest SFDR equity analysis has found that funds classified as Article 9 under SFDR outperformed those under Article 8 YTD (-20 percent vs -21.5 percent). An emerging trend shows that Article 8 funds are investing more in EU listed companies and Article 9 funds have become increasingly held by US listed firms. The report suggests that the US Inflation Reduction Act is potentially “serving as a catalyst for US green players” and that, despite greenwashing concerns regarding Article 8 & 9 classification, MiFID II is expected to build on SFDR and the Taxonomy, driving capital flows into ESG funds

HSBC Asset Management has launched a global equity circular economy fund that will invest in around 60 companies that are supporting the transition to a circular global economy by designing various natural solutions. It will be benchmark agnostic and take a bottom up, high conviction stock selection approach. The fund is classified as Article 9 under SFDR and is looking to deliver on all 17 of the UN Sustainable Development Goals.

AXA IM Alts has launched a €500 million natural capital strategy and is currently only available to AXA Group investors that provided the initial capital commitment. It is designed to support nature-based solutions and is part of AXA Group’s €1.5 billion commitment to protect forest ecosystems and remove up to 25 million tonnes of carbon dioxide each year. The firm has also appointed a natural capital market team, Adam Gibbon, Edoardo Cavallo and Camila Estabridis, who will support the new strategy.

Fidelity has launched a sustainable biodiversity fund which enables investors access to a global equity portfolio of companies that are contributing to biodiversity preservation. The fund will invest in companies that provide potential solutions to reducing biodiversity loss and are looking to minimise impact.

Franklin Templeton has launched a new social bond fund aimed at European investors. The Franklin European social leaders bond fund is the firm’s second Article 9 fund and will be co-managed by senior vice-president and head of EU fixed income David Zahn and vice-president Roderick MacPhee.

New research from Ortec Finance reveals climate change as one of the biggest drivers in increased spending on scenario modelling and stress testing. Just 41 percent of pension managers believe funds are ready to secure the yield they require in order to be fully funded in the face of climate challenges. Almost all pension funds surveyed say technological developments are enabling them to adopt more sophisticated investment strategies, with 90 percent expecting a rise in investment challenges over the next two years.

Institutional Shareholder Services (ISS) ESG has launched a freshwater index series that will allow investors to address freshwater risk while maintaining alignment with traditional ESG standards. The index will focus on emerging and developed markets and the methodology has been based off the ISS ESG water risk rating which was launched earlier this year.