Friday Funds: ESG outperformance almost double non-ESG mandates in 2020, says report

The latest developments in ESG-related funds

Ballie Gifford’s Positive Change fund returned more than five times the average fund in the IA Global universe, according to Willis Owen’s inaugural annual ESG review. More broadly, ESG funds outperformed their peers across major equity markets in 2020 – delivering near double the returns of non-ESG mandates. Other organisations highlighted at the global level included Aegon, Pictet, AB SICAV I, and Morgan Stanley.

Domini Impact Investments’ flagship Equity Fund, launched in 1991, has been ranked in the top 1% of the US Fund Large Blend category of mutual funds for the 12 months ending December 1, as calculated by Morningstar. The fund, which is sub-advised by State Street Global Advisors, adopted a new strategy in 2018. 

Robeco has developed what it claims are the first global fixed-income strategies to be fully compliant with the EU benchmark regulation for Paris-aligned investments. The RobecoSAM Climate Global Credits will invest in corporate bonds with explicit climate targets that contribute to the goals of the Paris Agreement; and the RobecoSAM Climate Global Bonds strategy offers a global aggregate portfolio of fixed income assets. Both strategies will be measured against new climate indexes developed jointly by Robeco and Solactive, and are domiciled in Luxembourg.

Amundi has launched its first Social Bond Strategy, which will invest in notes aligned with the Social Bond Principles, as well as conventional bonds issued by sovereigns and corporates selected for their strong social practices, and sustainability-linked bonds with social targets.

Greensleeves Homes Trust has closed a £15m charity bond offering early after attracting orders of £25m. Proceeds will be used to support older people in the UK. 

Mapfre Asset Management’s Responsible Capital and Responsible Inclusion funds have been awarded the French government-issued Sustainable and Responsible Investment label following an audit by French consulting firm, AFNOR.

Nuveen is among those to have invested in the Impact Investment Exchange’s third gender-focused bond – a $27.7m deal under its $150m Women’s Livelihood Bond Series. Proceeds will be used to support underserved women and female entrepreneurs in the Asia Pacific region. The Exchange bought some of the notes itself, via its new Women’s Catalyst Fund.

Dutch asset manager Anthos Fund & Asset Management has seeded a new fund from green investment house Osmosis. The undisclosed investment is in a Cayman Island-based vehicle, which will form part of Osmosis’ existing Resource Efficient Market Neutral Strategy. The strategy now has $130m and targets an absolute return and reduced carbon, water and waste footprints.

Fidelity International has launched Sustainable Research Enhanced UCITS ETFs for Japan and Pacific Ex Japan, comprising 150-200 stocks and 100-150 stocks, respectively.  Companies will be chosen and weighted based on Fidelity’s in-house sustainability ratings. 

Standard Life has launched four new sustainability funds: the SL Nordea Global Climate and Environment Fund, the SL Nordea Global Gender Diversity Fund, the SL ASI Sustainable Index UK Equity Fund, and the SL ASI Sustainable Index World Equity Fund.

Microfinance non-profit Grameen America has launched a $17.5m Social Business Fund II, which aims to provide nearly $200m of cumulative loan capital to low-income minority business owners over its five-year life. In its first year, investors will forgo 50% of their returns so that they can be reinvested as loans to Grameen America’s borrowers.

Green Angel Syndicate has launched the GAS Climate Change Fund to invest in early-stage companies across climate-positive energy, transport, buildings, agriculture, food and industry.

M&G Investments has developed three Sustainable Multi Asset funds, combining high ESG standards, impact investment and volatility management. The funds will hold between 20% and 50% of “positive impact assets”, as well as having a focus on climate change and a preference for direct investments to enable more control of ESG quality. M&G will report annually against the Sustainable Development Goals.

Lyxor Asset Management Group has partnered with fellow asset manager Bridgewater Associates to launch a multi-asset sustainability strategy, expected to be up and running in March 2021. The strategy will be available in a UCITS format, and will be managed by Lyxor and sub-advised by Bridgewater.

State Street Global Advisors has rolled out its ESG screen to cover all of its UK-domiciled equity and fixed income index funds – representing £20.8bn of its assets. – meaning companies in violation of the UN Global Compact principles, such as weapons manufacturers, will be excluded.

Schroders Real Estate, in partnership with Civitas Investment Management, has completed the first five projects to be funded by its Social Supported Housing Fund, which aims to develop 2,000 UK homes for adults with severe learning disabilities and significant mental health conditions.