Friday Funds: Nordea Asset Management launches Article 8 climate engagement fund

The latest developments in ESG-related funds: AXA IM launches biodiversity fund, investors to allocate more to ESG ETFs.

Nordea Asset Management has launched a new climate engagement fund. Classified as Article 8 under the EU SFDR, the fund invests in companies in the early stage of transition and seeks to push these to catch up to “climate leaders”, which Nordea says will “unlock under-appreciated value”.

European fund managers are set to allocate significantly more capital to ESG ETFs, according to a study from Tabula Investment Management. The ETF provider found a 42 percent increase in respondents to its survey who expect to “significantly allocate” new investments into ESG-focused ETFs, with more than half of investors using SFDR “classifications” to inform their decision making.

AXA Investment Management has launched a new fund investing in companies working in ecosystem preservation and restoration. The Article 9 fund will invest in listed equity across four themes: sustainable materials, land and animal preservation, water ecosystems, and recycling and reduction.

OCBC has listed a low carbon ETF with S$60 million ($43 million; €41 million) in starting assets on the Singapore stock exchange. The ETF tracks the iEdge-OCBC Singapore low carbon select 50 capped index, which includes best-in-class firms in Singapore and abroad based on emissions intensity.

ESG equity funds in the UK saw £8.6 billion ($10.8 billion; €10.3 billion) of inflows in Q1 this year, while £10.8 billion flowed out of their non-sustainable equivalents, according to research from Refinitiv Lipper. ESG funds outperformed non-ESG over three to five years, but lagged non-ESG by 7.8 percent to 8.3 percent over one year.

Power firm and renewables investor Fu-Gen has secured €320 million of investment from Israeli pension fund managers Migdal Insurance and Menora Mivtachim Insurance, as well as family office Arkin Group. The firm said it would use the proceeds to invest in onshore wind, solar, battery storage and green hydrogen, with investments in the UK and Finland planned later this year.

WisdomTree has launched a new recycling decarbonisation ETF. The fund, which will be classified as an Article 9 fund under the EU SFDR, tracks the Tortoise recycling decarbonisation index, which invests in global companies involved in waste-to-energy and recycling technologies.