Friday Funds: New Spanish ELTIF and iShares passes 100 ESG funds

The latest fund developments in ESG and sustainable finance

Alternative asset management house Tikehau Capital has launched a European Long-Term Investment Fund (ELTIF) dedicated to the energy transition. The new fund has been created for clients of Banca March, a family-owned Spanish bank specialising in private banking. It will invest in private equity opportunities and will mirror an existing fund launched by Tikehau Capital and oil giant Total in 2018. The ELTIF fund structure was created by the EU to promote long-term investment in the real economy, but has struggled to garner much interest from fund managers. 

BlackRock is boosting its offering of ESG ETFs via its iShares business with the launch of three new funds. It says the funds focus on companies with “an improved ESG profile and reduced carbon exposure while also achieving market-like returns with less risks”. The funds have global, European and US coverage, and take the number of sustainable ETFs and index funds offered by iShares past 100. “Inflows into global sustainable ETFs alone totaled $14.8bn in the Q1 of 2020,” iShares said in a statement. Over the same period, one of the new funds, the Edge MSCI Minimum Volatility UCITS ETFs outperformed its benchmark by 4%. “Over the next decade, BlackRock is forecasting assets invested in sustainable index funds and ETFs to grow by $1trn to $1.2trn,” the statement said. 

Investment house Brown Advisory has announced strong returns for its US Sustainable Growth Fund, which saw its assets triple in 2019 off the back of high demand from UK and European Investors. The $584m fund has outperformed its benchmark by 3.9% annualised since its inception in April 2017. In the first quarter of 2020, it outperformed by 3.8%.  

Cheyne Capital has launched its second impact real estate fund, the Cheyne Impact Real Estate Trust, which will contribute an initial £150m to tackle the need for long-term, affordable housing in the UK. The fund seeks to address three of Sustainable Development Goals: Good Health & Wellbeing, Reduced Inequalities and Sustainable Cities & Communities. 

T. Rowe Price has launched five sustainable funds covering Asia ex-Japan, US, emerging and global markets. The five will impose values-based parameters and exclude controversial weapons, assault-style weapons for civilian use, the production of tobacco, the production of thermal coal and adult entertainment. Additionally, “companies that have had an extreme environmental, social, ethical or governance breach and are not taking credible steps to remediate the issue” with be excluded, according to Maria Elena Drew, Director of Research, Responsible Investing at T. Rowe Price. The funds will be sold in Europe and the UK.

Legal & General Capital has taken a 36% stake in one of the UKs biggest heat pump technology players, the Kensa Group, for an undisclosed sum. The investment giant said the deal would contribute to its efforts on green finance, and that the heat pump sector was “accelerating rapidly”. 

Solactive claims to have become the first index provider to create EU-aligned green indices for both equities and fixed income. The German firm earlier this year created equity indices to satisfy the Climate Transition and Paris Aligned benchmarking rules currently being developed by the European Commission in a bid to improve the transparency and credibility of passive products in the space. Now, it has launched fixed-income versions.  

BNP Asset Management has incorporated ESG into two funds – one for infrastructure and one for small caps. The BNP Paribas Easy ECPI Global ESG Infrastructure Equity UCITS ETF will invest in 100 listed companies with the highest ESG ratings in the infrastructure sector. Companies must have a market capitalisation of more than €500m and fall under either communication, energy, transport, waste management, water, or social infrastructure. The BNP Paribas Easy MSCI Europe Small Caps SRI S-Series 5% Capped UCITS ETF tracks the performance of approximately 200 small caps selected according to MSCI's SRI methodology. Both are listed on Euronext Paris and Xetra.

Tribe Impact Capital, the UK wealth management fund focused on sustainability, has outperformed its benchmark, despite falling 6.6% in the first quarter of the year (compared with -10.6% for the Asset Risk Consultants benchmark). Tribe doesn’t issue quarterly performance reports, but did publish its three-year performance earlier this year, showing 6.7% outperformance of peers over the period. Tribe is a B Corps and invests 20% of its profits in “high impact, scalable, mission-driven organisations”.

UN agency the International Fund for Agricultural Development (IFAD) has made an investment of $9m (€8.4m) into the Agri-Business Capital (ABC) Fund – a blended capital impact fund supporting small-scale farmers and small- and medium-sized rural enterprises in developing countries. The investment was financed by the Swiss Agency for Development and Cooperation and is the first time IFAD has directly invested into a private sector entity. ABC Fund is managed by Bamboo Capital Partners, a commercial private equity firm with a specialisation in impact investments. 

Social impact specialist Resonance has exited the Community Share Underwiring Fund, which has deployed £3.1m to “community assets”. The vehicle supported 14 community groups in the UK to deliver social impact through “profitable local community projects”.

Arisaig Partners, a Singapore-based boutique, is launching an emerging markets impact strategy focusing on six thematic areas: Health, Financial Inclusion, Education, Employment, Gender Equality and Environment. The Arisaig Partners Next Generation Impact Fund – which has raised $90m (€85m) in committed capital – will invest in a concentrated portfolio of 20 stocks generating positive social and environmental impact, and will be launched in May.