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Friday Funds: Handelsbanken moves core index offering to Paris Aligned Benchmarks

The latest developments in ESG-related funds

Handelsbanken Fonder has reallocated €12.5bn of its “core global index offering” to funds aligned with the EU’s Paris Aligned Benchmarks. Five global and regional index funds have been moved over to a Solactive/ISS ESG Screened Paris Aligned Index Series, designed to reduce emissions by 55% upfront, with further reductions over time. “Reallocating existing assets under management rather than launching new separate ESG products is a natural part of Handelsbanken’s strategy that sustainability shall permeate all funds,” it said. The benchmarks exclude more sectors than the PAB methodology requires, “in order to comply with the exclusion requirements of the Nordic investor”, but “maintain the same exposure to high-climate-impact sectors as their investable universe”. 

Dedicated sustainability house Osmosis Investment Management has seen a boom in assets under management, announcing this week that it had passed the $3bn mark. The London-based firm only reached $2bn in AUM in January. Since then, it has launched a $250m fossil fuel free resource efficient fund.

HSBC has announced a $100m partnership with the World Resources Institute and WWF, investing into three themes: emissions reduction technologies, biodiversity protection and restoration, and the Asian energy transition. Money will be allocated to small companies and startups.  

The Aquila Energy Efficiency Trust plans to raise up to £150m by listing on the London Stock Exchange. The trust is targeting returns of 7.5-9.5% per annum for shareholders, by investing in companies with strategies to reduce primary energy consumption and carbon emissions. The fossil fuel and mineral extraction sectors will be excluded. 

BlackRock’s ESG Fixed Income Global Opportunities Fund returned 7.3% in the year since its launch in April 2020. The fund, which applies ESG screens and tilts, also buys qualifying bonds under BlackRock’s green bond taxonomy. 

Columbia Threadneedle has launched two new funds to invest in companies “targeting positive sustainable outcomes” across eight themes linked to the Sustainable Development Goals. One fund will be dedicated to European equities, while the other will have a global equities focus. 

Credit Suisse Asset Management has launched an ETF that tracks Qontigo’s DAX 50 ESG Index, which excludes companies in breach of the UN Global Compact or involved in weapons, tobacco, coal, nuclear power and military contracts. The 50 highest scorers are chosen for the index, but are capped at a 7% weighting.

Amundi has transitioned six conventional fixed-income ETFs over to ESG strategies and has classified them under Article 8 of the EU’s new Sustainable Finance Disclosure Regulation.

The first quarter of this year saw the launch of 87 new ESG ETFs according to data from Trackinsight, bringing the total to 758. Funds are increasingly aligning with the Sustainable Development Goals, the data shows, with 316 ETFs covering 15 of the goals – although these mainly centre on climate, affordable and clean energy, and industry, innovation and infrastructure. In Europe, Trackinsight says that ESG ETFs now have $161bn in AUM, more than 10% of the European ETF asset base.