Friday Funds: MSCI and Bloomberg launch family of emerging market fixed income indices

The latest developments in ESG-related funds: Canadian sustainable funds underperform in Q1; Schroders Capital gets €100m private impact mandate.

Bloomberg has launched a series of 10 fixed income emerging market ESG indices in partnership with MSCI. The series is built around three variants, available in multiple currencies: “ESG-weighted” indexes that weight issuers by their MSCI ESG rating, “SRI” indexes that screen out some controversial activities and “sustainability” indexes that include issuers with an ESG rating of BB or above.

Canada saw 28 new sustainable fund launches in the first quarter of 2022, more than in the previous two quarters combined, according to Morningstar. Net inflows to ESG funds in the quarter totalled C$2.2 billion (€1.6 billion), taking the total assets in sustainable funds in the country to C$33 billion. However, the “vast majority” of sustainable funds and ETFs underperformed their Morningstar category peers, with just 29 percent of equity funds outperforming.

Meanwhile, a report by Jefferies has found that ESG funds and ETFs domiciled in Europe also lagged the broader market in Q1. Open-end ESG funds returned -8.4 percent, while ETFs returned -6.6 percent, against -5.9 percent for the MSCI Europe and -3.6 percent for the S&P500.

German insurer Barmenia has handed Schroders Capital a €100 million private assets impact mandate. The portfolio, which will be classified as Article 9 under the EU’s sustainable finance disclosure regulation, will focus on impact investments across private equity, sustainable infrastructure and climate insurance, which RI understands will be mostly co-investments alongside other Schroders funds and its impact investing vehicle BlueOrchard.

Global X has launched a new ETF tracking the Solactive green building index. The index includes companies involved in the management, development or production of technologies and materials for green buildings globally.

MEAG, the asset management arm of Munich Re, has taken a 75 percent stake in a wind project in Sweden for an undisclosed sum. The manager bought the stake in the 260MW project from Eolus and Hydro Rein – latter remains co-owner with a 25 percent interest.

HSBC Asset Management has launched a new sustainable equity ETF focusing on Europe. The ETF, which is listed on the London Stock Exchange, seeks to achieve emissions intensity and fossil fuel reserve reductions of 50 percent versus the parent index, as well as improving the ESG score by 20 percent. It will be classified as Article 8 under SFDR.

Mirova, Omnes and Impala SAS Group have each invested €150 million in clean energy firm TagEnergy. The €450 million raise will see Mirova and Omnes take a minority stake and a board seat at the firm, while Impala remains the main shareholder. Funds raised will be used to drive delivery of the firm’s 2.7GW portfolio across Australia and four European countries.

FlexShares, the ETF wing of Northern Trust Asset Management, has launched a new emerging markets equity ETF. The ETF invests across global emerging markets, using Northern Trust’s ‘ESG Vector’ scoring and carbon risk ratings from ISS to select investments. It is targeting a reduction in aggregate carbon emissions relative to its parent index.

Amundi has launched two new Article 8 ETFs. The ETFs, available in euros and dollars, track a Bloomberg global fixed income index excluding the bottom 20 percent of ESG performers and controversial businesses, and an MSCI Far East ex-Japan index containing the 50 percent of companies with the highest ESG scores in the parent index, which also includes a negative-screening approach.