Friday Funds: Northern Trust launches emerging markets strategy

Northern Trust Asset Management has launched a sustainable transition index strategy for emerging markets. The strategy, which uses the MSCI World Index and the MSCI Emerging Markets Index as parent indices, will combine Northern Trust’s ESG exclusion approach with screens to minimize climate related risks. All fossil fuels will be screened out, and positive tilts will be applied to companies with green revenues and a strong climate strategy.

US software firm ServiceNow has allocated $100m to a racial equity strategy which will be run by RBC Asset Management’s impact investing team . The strategy is “designed to drive more sustainable wealth creation by funding homeownership, entrepreneurship and neighbourhood revitalisation within black communities” in under-resourced areas across the US. The partnership will focus on buying smaller community loans to increase the lending capacity for local banks.

Ethical and sustainable funds are among the best performers in the Crown Ratings, published by global fund data and technology provider FE fundinfo. Despite representing 5.04% of the funds assessed, sustainable and ethical funds formed 8.44% of those given the top ‘Five-Crown Accolade’. 

Schroders has launched two UK Unit Trusts for its Global Sustainable Growth and Global Energy Transition funds. The former has a cumulative net 10-year performance of 186% with returns of 26.5% in 2020, while the latter has a cumulative net performance of 114% and produced returns of 91.9%.

Morningstar’s latest report on sustainable fund flows globally has found that assets in sustainable funds hit a record high $1.65tn in Q4 of 2020, up 29% from the previous quarter. Europe continued to dominate the market, accounting for 79% of the $152bn inflows in Q4. The US accounted for a further 13%.

A report from Greenpeace analysing the climate impact of the 100 largest equity investment funds domiciled in Luxembourg has found they emit on average 10% more greenhouse gases than the MSCI World Index. The report also found that the Luxembourg fund industry has a “disproportionately high exposure to coal”, despite the country seeking to position itself as a leading on green finance in recent years. 

Blue Horizon Ventures has announced the €183m final close of its first fund, which will invest in food and agriculture innovations, including alternative proteins, synthetic biology and smart packaging. The fund originally targeted a size of €100m, but increased its hard cap after higher than expected interest, it said. 

Solar developer DSD has closed a $300m debt facility with Credit Suisse. The debt facility will be used to finance a range of commercial and industrial projects, as well as distributed power generation assets.

French private equity firm InfraVia has signed an SDG-linked equity bridge facility for one of its funds. The facility is backed by a syndicate of financial institutions including HSBC and the Royal Bank of Canada.

Actor Robert Downey Jr. has launched two venture capital funds as part of his new ESG-focused project FootPrint Coalition Ventures. The two funds, one early-stage and one late-stage vehicle, have already invested in a number of companies, including Ÿnsect, a company which produces food from mealworms.

Sustainable infrastructure investor Pioneer Point Partners has reached the €150m first close target of its first institutional fund, supported by five unnamed European and North American institutions. The fund is seeking to raise total capital commitments of €500m and is targeting a 15%+ IRR.