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Friday Funds: KLP among asset owners to back housing fund with fees linked to impact

The latest developments in ESG-related funds

Norwegian pension fund KLP is one of nine asset owners to participate in a €270m funding round for a sustainable housing strategy that links management fees to impact targets. Eight unnamed pension schemes and insurers in Germany also invested in the European Residential III Fund from Berlin-headquartered Catella Residential Investment Management, bringing its total equity to €750m. The vehicle, which describes itself as the first ‘dark green’ pan-European residential ESG impact fund, launched two years ago and includes a penalty clause for management if it doesn’t meet its financial or societal targets – which include cutting carbon, and offering affordable housing and decent living conditions. That penalty requires Catella to donate part of its recurring fee to “a relevant ‘impact-related’ United Nations fund”. KLP’s investment manager for real estate, Andreas Farberg, said the clause was one reason it selected the fund. 

The UK’s Pension Protection Fund and APG Asset Management, which runs money for Dutch government pension fund ABP, have purchased a 30,000ha forestry holding in New Zealand. Under the agreement, the two will acquire a 62% share in the holding from Sinotrans New Zealand for an undisclosed sum. The holding will be managed by the Australia New Zealand Forest Fund 2, which owns the remaining 38% share.

UBS Global Wealth Management has said it will commit up to $1.5bn to Robeco’s new SDG equities fund. UBS will be an “exclusive partner” for the first six months of the fund, which will actively engage with portfolio companies to improve their alignment with the UN Sustainable Development Goals. It will be benchmarked against the MSCI All Country World Index.

Australian Ethical has reallocated A$250m to a new ethical multi-asset high growth fund, which will invest up to 20% in alternative and illiquid assets and is targeting a return of 4.5% over the consumer price index. It did not disclose which existing strategy the capital was moved from. 

Edinburgh based investment manager Abrdn, formerly Standard Life Aberdeen, has launched a Responsible Global Asset Strategies Fund to invest in equities and fixed income securities that “promote ESG characteristics”. It will target a 5% return, applying standard ESG exclusions and excluding companies and sovereigns which receive a low rating according to its in-house ratings system. 

PGIM, formerly Prudential Investment Management, has launched an ESG Total Return Bond Fund that will employ exclusion screens including ruling out issuers that do not reach a minimum ESG rating, according to PGIM’s in-house ratings. 

Lombard Odier and Saudi financial firm SEDCO Capital have launched a sharia-compliant ESG equity fund. The SC LO Global ESG Equities fund will invest in developed market equities using an approach which “aligns Shariah-compliant, responsible investment and sustainability principles to construct a portfolio with a high ESG score”.

AXA has confirmed its intention to become an anchor investor in a new clean-hydrogen investment platform called Hy24. The platform is a partnership between private equity house Ardian and fledgling alternatives investor FiveT Hydrogen, and will invest in the hydrogen value chain across Europe, the Americas and Asia. It is targeting €1.5bn for its first fund and has already raised €800m from backers including Air Liquide, TotalEnergies and PlugPower. 

FTSE Russell has launched a series of US equity indices with ESG considerations, based on the Russell 1000, Russell 2000 and Russell 3000. Each index removes controversial weapons, firearms, tobacco and fossil fuels companies, and those with the highest level of ESG controversy. An ‘ESG enhanced’ version also targets an improved ESG score versus the benchmark, using Refinitiv data.

Eurex has launched futures on the Bloomberg Barclays MSCI Global Green Bond and Euro Corporate SRI indexes.