Friday Funds: AllianzGI launches $1bn blended finance climate debt strategy

The latest developments in ESG-related funds: Vanguard launches low-carbon transition fund, UK govt appoints Federated Hermes and Finance Earth to manage nature impact fund.

Allianz Global Investors has launched a climate solutions blended debt strategy focused on emerging markets, ACSEM, in partnership with Allianz Group and an unnamed regional development finance institution. The strategy is expected to be a $1 billion risk-tiered structure that will invest alongside DFIs in Paris-aligned projects, targeting assets that consider both climate mitigation and adaptation factors, as well as low-carbon sectors. It will seek exposure across multiple sectors including energy, transition infrastructure, financial institutions, agriculture business and manufacturing.

Vanguard has launched a low-carbon transition fund. The Global Environment Opportunities Stock Fund will be run by asset manager Ninety One and is opening for a two-week subscription period. The fund will begin investing on 16 November in a concentrated portfolio of 25 companies involved in renewable energy, resource efficiency and electrification. It will be managed by Ninety One portfolio managers Deirdre Cooper and Graeme Baker.

The Department for Environment, Food and Rural Affairs (Defra) has appointed Federated Hermes and Finance Earth as fund managers to develop its Big Nature Impact Fund. Defra will provide seed investment and have an active role in setting the fund’s mandate and governance through a limited partnership agreement with the fund managers and other investors.

Bloomberg has launched a suite of 24 indices tracking global aggregate green, social, sustainability bonds. The indices cover global GSS debt as well as individual labels and EUR/USD-denominated bonds.

Morgan Stanley Investment Management has launched two Article 9 funds in partnership with Calvert Research and Management. They are the Sustainable Climate Transition Fund, which will invest in listed global equities, and the Sustainable Global Green Bond Fund.

Nearly 20 percent of Article 9 funds have more than 10 percent exposure to companies that violate the UNGC principles or the OECD guidelines for multinational enterprises, according to research from Clarity AI. The research, which looked at 750 funds, found 40 percent have more than 5 percent exposure to these sectors. Violations include bribery and corruption convictions, anti-competitive practices and environmental impacts.

Private equity firm L Catterton has launched an impact investing platform aimed at investing in ESG companies. The fund will target companies that address mitigating climate change, waste reduction, nature preservation, and eliminating health, wellness, and nutrition. Tehmina Haider and Michael O’Leary have been appointed to lead the new strategy.

Orchard Street has made its first close, of around £90 million, for its inaugural impact fund. Brunel Pension Partnership was the cornerstone investor on behalf of eight of its 10 underlying local authority partner funds. The Social and Environmental Impact Partnership will focus on decarbonising existing buildings, investing in local communities and improving the quality of homes and offices.

Impax Asset Management has launched a listed infrastructure fund. The fund is based on Impax’s existing Active Sustainable Infrastructure strategy, which looks to avoid the sustainability risks dominating the infrastructure sector. The fund will invest in companies with more than 20 percent of their assets generated by providing access to resources or improving societal wellbeing. The strategy will be co-managed by senior portfolio manager Justin Winter, and portfolio managers Harry Boyle and Christine Cappabianca.

Sustainable bond volumes are due to total $900 billion in 2022, according to a new forecast from Moody’s Investors Service. Global sustainable bond volumes totalled $215 billion in Q3 of 2022, comprised of $119 billion of green bonds, $41 billion of social bonds, $47 billion of sustainability bonds, and $8 billion of sustainability-linked bonds.

The Business Development Bank of Canada (BDC) has launched a $400 million fund aimed at supporting Canadian climate tech and cleantech firms. The Climate Tech Fund II follows BDC’s Cleantech Practice Fund I in 2018. The strategy will be run by managing partner Susan Rohac.

LeapFrog Investments has launched a climate investment strategy to support companies that enable climate mitigation and adaptation in developing countries. The strategy will invest in sectors including solar energy, distributed energy systems, two-wheeler electric vehicles and smart agricultural practices. Nakul Zaveri has been appointed as partner to co-lead the new investment alongside Phyl Georgiou, head of climate strategy and operations.

Algebris Investments has launched an equity strategy investing in companies tackling resource scarcity. The Sustainable World Fund will be run by portfolio manager Simone Ragazzi and head of ESG and policy research Silvia Merler. The Article 9 fund will invest in listed companies with low environmental footprints, which contribute positively to the UN SDGs.