Friday Funds: ERAFP awards mandates to manage USD-denominated SRI credit bonds

The latest developments in ESG-related funds: Carmignac downgrades three funds to Article 8; Gresham House launches Irish forestry fund.

French public service pension scheme ERAFP has awarded four mandates to manage a portfolio of US dollar-denominated SRI credit bonds. AXA Investment Managers and FundLogic, which will delegate financial management to Eaton Vance Management, have been awarded the active mandates of around €1.2 billion. The two latter companies are both subsidiaries of Morgan Stanley Investment Management. The stand-by mandates have been awarded to Amundi and BlackRock. They will be awarded for an initial period of six years, with the possibility for ERAFP to renew the contracts for a two-year period. The asset managers will be responsible for building a portfolio mainly invested in dollar-denominated bonds of issuers located in OECD countries, except for bonds issued or guaranteed by a sovereign state or local authority, while ensuring sector diversification and compliance with ERAFP’s socially responsible investment framework. The managers must also strive to support ERAFP’s commitments as part of the Net Zero Asset Owner Alliance.

Carmignac has downgraded three of its sub-funds from Article 9 to Article 8 in response to the revisions to SFDR Level 2 disclosures which were introduced this week. The sub-funds include Portfolio Family Governed, Portfolio Investissement and Portfolio EM Debt. Several of Carmignac’s other funds have also received new sustainability objectives, including increasing the minimum proportion of sustainable investment required and increased carbon emission targets. The downgrades follow a string of reclassifications from other asset managers.

Gresham House has launched a fund to drive afforestation in Ireland and contribute to the country’s climate action plan. The Irish Strategic Forestry Fund has received €35 million from domestic investors, including a €25 million cornerstone investment from the Ireland Strategic Investment Fund. The new fund will provide up to €200 million to create new forests. It will also acquire existing forest assets and, once fully deployed, will represent a portfolio of around 12,000 hectares. The fund has put in place an operational management agreement with Coillte, Ireland’s semi-state manager of forestry and timber investments.

Local government pension pool LGPS Central has launched a search for an emerging market equity manager for its Emerging Markets Equity Active Multi-Manager Fund. The manager is expected to be funded with a total value of more than £100 million early this year. The required manager must have a minimum of £250 million external client money invested as of 30 September, with a three-year track record to the same date in managing the emerging market equity strategy submitted for this procurement. The pension pool is looking for active managers which use a fundamental, as opposed to quantitative, strategy as well as evidence of robust performance in this style of investing. The selection questionnaire must be submitted by 13 January.

IDB Invest and Finland have launched a blended finance climate fund in Latin America and the Caribbean. The Finland-Latin America and the Caribbean Blended Finance Climate Fund will receive €50 million in financing from Finland. IDB Invest – a member of the Inter-American Development Bank Group – will originate, execute and manage the fund’s blended finance resources using various investment instruments, including debt instruments, guarantees and equity investments, as well as performance-based incentives.