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Friday Funds: Environment Agency backs Lombard Odier sustainable private credit fund

The latest developments in ESG-related funds: Mitsui and Nomura acquire $5.5bn forestry manager; hydrogen underperforming clean energy ETFs says Jefferies.

The Environment Agency Pension Fund has participated as a cornerstone investor in Lombard Odier’s new sustainable private credit strategy. The strategy, which has announced its first close, will provide bilateral private loans to “climate transition-oriented industries” in North America, and will seek to provide “compelling risk-adjusted returns expected to be less market-correlated than traditional direct lending strategies”.

Mitsui and Nomura have acquired A$7.8 billion (€5.1 billion; $5.5 billion) forestry manager New Forests for an undisclosed sum, reported by the Australian Financial Review to have been several hundred million Australian dollars. Mitsui is set to increase its stake in the manager – which counts APG, AP2, Temasek and the Pension Protection Fund among its clients – from 23 percent to 49 percent, while Nomura will take 41 percent of the firm. The manager’s staff hold the remaining 10 percent. Mitsui and Nomura will take two board seats each.

UK investment consultancy Redington has selected Ninety One’s global environment fund as the default fund for its DC staff pension scheme. The fund, which has returned -19.96 percent in the year to date according to Morningstar Direct, invests at least two-thirds of its assets in shares in companies “which contribute to positive environmental change through sustainable decarbonisation”.

Royal London Asset Management has announced the launch of a new sustainable growth fund, investing across equities and fixed income. The fund, which launches with £100 million in assets, will seek to “exploit the investment opportunities available as a result of market inefficiencies and the undervaluation of companies that can have a positive influence on society and the environment”.

The Global X Hydrogen ETF has underperformed the iShares Global Clean Energy ETF since July 2021, according to a new report from Jefferies, which said the evidence suggested “that hydrogen is not yet a winning tech”. The report, which compared the performance of a number of ESG funds and their equivalents, also found that the clean energy ETF was underperforming a US oil ETF this year, although the gap is narrowing.

Find out more about this topic from industry leaders at the RI Europe 2022 conference, taking place in person in London on 14-15 June.