Friday Funds: RLAM wins Brunel bond mandate for ‘thoughtful’ approach to ESG

The latest developments in ESG-related funds

Royal London Asset Management (RLAM) has beaten off 25 other investment managers to win a mandate for a £2.1bn sterling bond fund for pension pool Brunel, because it “demonstrated the most advanced and thoughtful approach to ESG integration and engagement relative to the other managers”. The fund has been created on behalf of Brunel’s 10 UK-based local authority pension fund clients, and will invest in sovereign, sub-sovereign and corporate bonds, asset-backed securities, spot FC, FX forwards, government bond and interest rate futures and money market funds. It will be benchmarked against the iBoxxSterling Non-Gilt All-Maturities Bond index. David Cox, Brunel’s Head of Listed Markets, said: “Our clients’ prioritisation of ESG considerations was reflected in the fund’s design and manager selection process. The manager is contractually committed to providing evidence of ESG impacts of decisions taken in the fund, and of any broader contributions the fund is making to investing responsibly.” No exclusions will apply, but the fund will integrate RLAM’s debt-specific ESG analysis, according to a spokesperson, who added: “The priority here is that the reporting is robust and can be strengthened as needed… Reporting will include evidence of proactive ESG integration, as well as transparency on engagement activities. RLAM will regularly report on various metrics including ESG scoring, carbon data and Net Zero alignment.”

The pension fund for the London Borough of Camden has moved two of its passive equities portfolios to Paris-aligned benchmarks. The borough is switching undisclosed sums from the Baillie Gifford CIV’s Global Alpha Growth Fund and an unnamed Legal & General Investment Management fund into lower-carbon equivalents. 

The Renewables Infrastructure Group increased its portfolio value by £278m to £2.49bn in the first half of 2021, according to its interim results. The London-listed investment company increased its portfolio generation capacity by 121MW to nearly 2GW over the period, investing £341m. Since its IPO in 2013, the group has achieved a 9.2% return versus 5.6% for the FTSE250.

Singapore-based investment manager White Oak Capital has launched an ESG sub-fund under its India Acorn ICAV equity fund. White Oak said that the sub-fund, which it claims falls under Article 8 of the EU’s Sustainable Finance Disclosures Regulation, “promotes ESG and lays emphasis on sustainability”.

BMO Insurance has begun offering ESG options for its universal life policyholders. The insurer now offers five ESG indexed accounts, linked to the performance of five ESG funds managed by BMO Global Asset Management.

London-based investment trust VH Global Sustainable Energy Opportunities (GSEO) has acquired a portfolio of distributed solar assets worth £50m. GSEO has now committed 59% of the net proceeds raised at its IPO.

Invesco has launched an exchange-traded fund tracking the MAC Global Solar Energy Index, which focuses on companies across the full solar supply chain, from raw materials to development. The index is weighted by market cap and proportion of revenues derived from solar activities.

AXA Investment Management has announced the launch of an ACT Framlington Clean Economy fund investing in 40-60 stocks across green transport, smart energy, sustainable agriculture and food, and natural resource preservation. 5% of management fees paid by the fund will be donated to the Epic Foundation. 

Sustainable and impact investor Bridges Fund Management has sold part of its stake in gluten-free snack producer Wholebake to Elysian Capital for an undisclosed sum. The sale is the second investment in August made by the Elysian Capital III LP Fund, which closed in September 2020 at £325m.

JP Morgan Asset Management has become a fund management partner of impact investments platform The Big Exchange. The JPM Emerging Markets Sustainable Equity Fund will become one of 46 funds from 15 asset managers offered by the platform.