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Friday Funds: US life insurer targets ‘inequality and racial wealth gap’ with $100m impact fund

The latest developments in ESG-related funds

Northwestern Mutual has announced the launch of a $100m impact investing fund to address inequality and the racial wealth gap. The fund will direct investments to black communities both nationally and across the Milwaukee area in the state of Wisconsin. It will focus on three ‘key opportunities’: physical and social infrastructure, access to capital for individuals and businesses, and healthy sustainable neighbourhoods and communities. 

Royal London has announced plans to introduce ESG tilts to its £23bn passive equity funds, a move which it says will reduce the carbon intensity of its ‘governed range’ by 10%. The tilted funds will increase their holdings in companies with “good ESG practices” and reduce holdings in companies with poorer practices. 

Hartford Funds has launched its first ESG ETF. The Hartford Schroders ESG US Equity ETF will aim to achieve a better ESG profile than its benchmark, the Russell 1000 index, while targeting long-term capital appreciation. Schroders will sub-advise the ETF, identifying ESG criteria for the investments.

Nuveen has launched an active ETF clone of the Winslow Capital Large-Cap Growth ESG fund. The fund applies ESG-based exclusions and claims to have a better weighted average ESG quality score than its index. According to Morningstar data, assets in Nuveen’s ETFs have almost quadrupled to $4.1bn since the start of 2020.

KGAL Investment Management has announced the launch of its first renewables impact fund. The KGAL ESPF 5 fund, which the asset manager said is categorised as Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation, will invest in solar, on and offshore wind and hydropower generation in Europe. Investments in other renewables, storage technologies and grid infrastructure will also be considered by the 10-year fund, which is targeting net returns of 7-9%.

JP Morgan Asset Management has launched a new sustainable equity fund. The fund will consist of US firms deemed most sustainable by the investment team, as well as those demonstrating sustainability improvements, and will apply exclusions to unsustainable industries and businesses.

Sustainable active funds in the US saw record inflows in Q2 this year, attracting $8.4bn in new investment, according to figures from Morningstar. However, the market share of active funds is declining, with active funds representing 60% of the $304bn in US sustainable funds, versus 82% three years ago.