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Friday Funds: Liontrust’s new trust fees to finance R&D into ‘uninvestable’ SDGs

The latest developments in ESG-related funds

Liontrust has confirmed plans to launch an ESG investment trust managed by Peter Michaelis, Simon Clements and Chris Foster. First reported last month, the new ‘ESGT’ will invest in 25-35 “sustainable” companies, primarily in developed markets. The expansion into closed-ended investments comes after Liontrust’s open-ended funds and mandates saw assets under management and advice grow from £2.5bn in 2017 to £10.2bn in March 2021. Michaelis, the firm’s Head of Sustainable Investment, said the new format would allow Liontrust to invest in small caps for the first time. He added that up to 10% of the management fees would be used to fund research and development for financial instruments targeting “currently uninvestable” Sustainable Development Goals. "When these financial instruments are developed, they will become available to ESGT and other investors.” The trust will be chaired by Richard Laing, former CEO and Finance Director of the Commonwealth Development Corporation (now CDC). 

The German government has selected S&P Dow Jones to create a climate transition benchmark, following the announcement this week that it will move €9bn of public pension equity assets over to such instruments. The Government said it would use two new indices; however S&P states it will develop just one. The S&P Eurozone 60 Bund-SV Index will be based on the methodology of the EU’s Climate Transition Benchmarks. Companies in breach of the UN Global Compact and involved in ESG controversies will be excluded from the index.

Lombard Odier Investment Managers has launched four Net Zero strategies, covering European and global fixed-income and equities. The strategies will progressively accelerate the decarbonisation of their constituents in line with a 1.5℃ goal.

Mirabaud Asset Management’s European convertible bond strategy has been awarded the French SRI label. Two other Mirabaud strategies already hold the label, which was created by the French finance ministry and requires systematic and measurable integration of extra-financial and ESG analysis.

The global sustainable investment universe attracted net inflows of $185.3bn in Q1 2021, up 17% on Q4 2020, according to data from Morningstar. Europe continued to dominate, accounting for 79% of flows, followed by the US with 11.6%. Global assets in sustainable funds are nearing the $2tn mark, the figures say.

New Zealand’s Exchange has launched two new carbon efficient indices in partnership with S&P Dow Jones, which it claims are the country’s first. The S&P/NZX 50 Carbon Efficient Index and S&P/NZX 50 Portfolio Carbon Efficient Index weight companies on the NZX according to Trucost environmental data. 

BlueBay Asset Management has launched an impact-aligned bond fund, which it categorises under Article 9 of the EU’s Sustainable Finance Disclosures Regulation. The strategy invests in companies whose activities contribute to addressing environmental and social challenges, mostly focusing on developed market investment grade corporate bonds.

Aviva Investors has secured $350m from its multi-asset range and the Aviva Ireland multi-asset portfolio for its new climate transition global credit fund. The fund will invest in firms offering goods and services to support climate mitigation, as well as those best placed for the net-zero transition. It will exclude fossil fuel companies.