Friday Funds: USS to shift £5bn to LGIM climate transition benchmark

The latest developments in ESG-related funds

This article has been updated to clarify that BlackRock is the current manager of the £5bn USS equity holdings

The Universities Superannuation Scheme, the UK’s largest private pension fund, is to shift £5bn of developed markets equity holdings currently managed by BlackRock to track a specially developed climate transition benchmark from Solactive managed by LGIM. The benchmark excludes companies which rate poorly against the four climate-related SDGs, as well as companies in breach of the UN Global Compact principles, while overweighting firms which are on track to hit their decarbonisation targets, as well as being prevented from underweighting firms in high impact sectors. The £2.2bn Shropshire County Council pension fund also announced it would be switching £700m of equity investments run by LGIM to a low-carbon alternative this week. 

M&G has launched a new equity strategy investing in companies “demonstrating gender and ethnic diversity and those offering solutions driving greater social inclusion and equality”. The fund, which M&G classifies as Article 9 under the EU’s Sustainable Finance Disclosure Regulation, will be composed of 30-40 stocks, with 15% invested in companies providing solutions “to empower social inclusion”, with the rest allocated to firms with a minimum of 30% women “and/or” ethnic minority board members. 

M&G has also acquired a majority stake in sustainable housebuilder Greencore Construction for an undisclosed sum. M&G said it planned to invest up to £500m in new developments of private and affordable housing over the next three to five years in partnership with Greencore. 

Stuart Investors has launched a new Europe ex UK sustainable equity strategy. The fund will hold 30-40 investments at a time, aiming to invest in and engage with “companies that that are helping make the world healthier, cleaner and more productive”, while avoiding companies that participate in harmful and controversial practices. 

Janus Henderson has announced that it will classify eight of its funds – two absolute return funds, three bond funds, two equity funds and a natural resources fund – under Article 8 of the EU SFDR. The funds join one already classified as Article 8 and three as Article 9 in Janus’ offering. 

Legal & General Investment Management has launched four new ESG index funds as part of its future world range. The funds cover Europe ex UK, Japan, North America and APAC ex Japan.

Quintet has launched a new investment fund which it claims is the world’s first multi-asset climate neutral fund. The Essential Portfolio Selection Quintet Earth fund launches with €280m in assets and invests in green bonds and low carbon equities, replicating the Bloomberg MSCI Global Green Bond and MSCI World Low Carbon Equity Target indices. All emissions associated with equity investments are offset through the purchase of carbon credits through non-profit Myclimate.