Friday Funds: Engine No. 1 launches transition ETF

The latest developments in ESG-related funds

Hedge fund Engine No. 1 has launched its first thematic ETF with anchor investment from advisory firm Jordan Park. The actively-managed Transform Climate ETF will invest in companies “that have a strategy to create value on their path to net zero” across multiple industries including transportation, energy and agriculture.

German real assets investor PATRIZIA has launched a sustainable communities fund with €125m in seed investment from AP Pension and PKA. The fund, which is being classified as an article 9 fund under EU disclosure rules, will invest in affordable housing and social infrastructure including day care centres and healthcare facilities for underserved communities in a number of European cities, and is targeting a €500m raise.

Jupiter has announced the launch of an ‘ecology bond’ fund investing in companies contributing to biodiversity restoration climate change mitigation. The fund, which Jupiter classes as an Article 9 fund under the EU’s sustainable finance disclosure regulation, will invest in 60-90 issuers, including both labelled and unlabelled bonds. It may invest across credit ratings, but expects the average rating to be investment grade. Jupiter has also launched an Article 8 version of its dynamic bond fund, which will actively promote environmental and social characteristics.

Sustainable fund assets expanded by 9% in Q4 of 2021 to reach $2.74trn, according to a new report from Morningstar. Europe continued to dominate the space, accounting for 80% of inflows, and the fourth quarter saw the launch of 266 new sustainable funds.

NextEnergy Capital has raised $905m for the final close of its NextPower III ESG fund, its largest private fund to date. The fund, which currently has a 742MW portfolio of solar assets, focuses on solar infrastructure in selected OECD countries including the US, Portugal, Spain, Chile and Poland.

HSBC Asset Management has launched a new Asia ESG bond fund. The fund, which HSBC is classifying as Article 8 under the EU SFDR, will invest in Asian companies following good ESG practices and with low or decreasing carbon intensity as well as labelled bonds. Low ESG rated sectors including weaponry, thermal coal, gambling, tobacco and issuers in breach of the UN global compact are excluded. Meanwhile, HSBC holdings has invested $100m in the Breakthrough Energy Catalyst, an initiative designed to support decarbonisation of high carbon sectors via investments in direct air capture, clean hydrogen, long-duration energy storage and sustainable aviation fuel.

Octopus Investments has launched a new sustainable venture capital trust. The Octopus Future Generations VCT will invest in early-stage companies across three themes: building a more sustainable planet, empowering people and revitalising healthcare.

Brown Advisory has launched a new global sustainable bond fund. The fund will invest in corporate and sovereign bonds in developed and emerging markets, integrating ESG research with its credit analysis, and launches with £75m in assets from seed investors.

The Global Palladium Fund has launched an Exchange Traded Commodities investing in metals used in the production of electric vehicles. The fund, which tracks the performance of the Solactive GPF electric vehicle index, will invest in copper, palladium, nickel, cobalt and platinum.

EdenTree Investment Management has launched two new sustainable funds: a global impact bond fund investing in labelled and non-labelled bonds, and a ‘green future fund’ investing in 40-60 companies across seven themes including regenerative agriculture, alternative energy and the circular economy.

Euroclear has announced an investment of an undisclosed size in ESG fintech firm Greenomy. The firm digitalises data capture and reporting to enable market participants to better comply with EU sustainable finance legislation.