Responsible Funds, Feb. 22: UK pooled funds, FRR, Allianz, Rathbone Greenbank, BNP Paribas, UBS, Wellington

The round-up of the latest responsible funds developments

A speech by UK Pensions Minister Guy Opperman at the TUC Pensions Conference recently gave renewed impetus to the Red Line Voting (RLV) initiative, when he questioned why the “end investors” (i.e. trustees) cannot cast their votes in pooled fund arrangements. Leanne Clements, RLV campaigner for the Association of Member Nominated Trustees, called out the “continued reluctance from the fund management community to adopt client policies in pooled fund arrangements” and welcomed the support from the Department for Work and Pensions to empower asset owners. Opperman also suggested giving trustees clarity about their duties regarding ESG considerations.

Allianz Global Investors has launched a new ESG fund targeting European equities “well-prepared” for the “transition towards a low-carbon economy”. The Allianz Climate Transition fund, which is domiciled in Luxembourg, will be managed by portfolio manager Christine Clet-Messadi. It uses the MSCI Europe Index as its “reference portfolio” and has been spun out from a three-year-old France domiciled strategy.

Rathbone Greenbank Investments, the dedicated sustainability arm of UK investment manager Rathbones, has partnered with the UK’s National Lottery Heritage Fund to launch a new £7m impact fund seeking to deliver “positive economic and social impact through the re-use of heritage buildings”.

European investors will reportedly still have access to Rathbone’s ethical investment option after Brexit, following planned changes by the UK investment manager. Rathbone has revealed plans to replace its existing Luxembourg-domiciled feeder-funds, which currently invest in the firm’s UK domiciled master funds, including the Rathbone Ethical Bond, with equivalent directly-investable Luxembourg based funds. The current master-feeder arrangement will end upon the UK’s exit from Europe.

Swiss giant UBS has “repositioned” three fixed income funds to give them a “better sustainability profile” in response to investor demand. The three Luxembourg funds: UBS (Lux) SICAV 2 – EUR Corporate Bond Sustainable (EUR); UBS (Lux) SICAV 2 – CHF Bond Sustainable (CHF); and UBS (Lux) SICAV 2 – USD Corporate Bond Sustainable (USD) will now use UBS’s proprietary ESG scores when selecting securities.

Spanish insurer MAPFRE has invested €35m in what is claimed to be the first green bond to use blockchain technology, issued by Spanish banking group BBVA. The six-year term bond, which was certified by Norway’s DNV, will be used to finance green projects within BBVA’s framework designed around the UN’s Sustainable Development Goals (SDGs).

US asset management giant Wellington has reportedly launched a new ESG-focused fund. The Wellington Global Stewards Fund, which has a concentrated, large-cap global equity portfolio, aims to generate returns by investing in companies that exhibit world-class stewardship. It will be managed by equity fund manager, Mark Mandel and equity portfolio manager, Yolanda Courtines.

The Marguerite European infrastructure fund has taken an 80% stake in two ready-to-build solar photovoltaic assets with a total capacity of 100 MWp in Spain from OPDEnergy.French state fund Fonds de Réserve pour les Retraites (FRR) says it has initiated the renewal of the active management mandates of its portfolio by increasing its level of requirement regarding the integration of ESG criteria. “To reflect its commitment to the ecological and energy transition, the FRR has decided to exclude companies whose thermal coal mining or coal-fired electricity, heat or steam generation business exceeds 10% of their revenue (threshold of 20% formerly).” It came amid a return of -5.16% in 2018 “due to a brutal fall in the equity markets during the last two months of 2018 and particularly in December”.

BNP Paribas Asset Management has launched a new Luxembourg domiciled socially responsible credit exchange-traded fund (ETF), offering exposure to around 400 low carbon, euro-denominated investments grade bonds. The BNP Paribas Easy € Corp Bond SRI Fossil Free UCITS ETF, which is part of Paris based firm’s Easy range of ETFs, replicates the Bloomberg Barclays MSCI Euro Corporate SRI Sustainable Reduced Fossil Fuel Index.

US investment manager Nuveen is supporting healthy eating in low-income US communities, with a $10m investment in Revolution Foods, a company on a mission to “transform the way America eats”. The investment was made as part of Chicago based firm’s global impact investing private equity strategy, which has allocated more than $850m in impact investments since 2012.

Blackrock has given an ESG makeover to three of its thematic strategies to reflect its commitment to ESG investing, Citywire reports. Its BGF New Energy fund becomes the BGF Sustainable Energy fund; the BGF World Agriculture fund is rebranded as the BGF World Nutrition fund; and the BGF Flexible Multi-Asset fund is now the BGF ESG Multi-Asset fund.

Global investment firm KKR has announced its acquisition of a 60% stake in Ramky Enviro Engineers Limited, an India based provider of global environmental services and solutions. The $510m investment was made via KKR’s Asian Fund III and forms part of the New York based firm’s Global Impact strategy.

CDC, the UK’s development finance institution, has become an anchor investor in a new fund targeting high-growth small and medium sized businesses in Nigeria, with its $15m allocation to the CardinalStone Capital Advisors Growth Fund (CCA). Dutch development bank FMO and the Nigerian sovereign wealth fund contributed $15m to the fund which reached a first close of $50m.

The Government of Monaco will partner with France based impact investor Investisseurs & Partenaires (I&P) to launch what is claimed to be first Africa focused education impact fund. The first phase of the agreement between the sub-Saharan impact investment specialist and the independent city state will be the conducting of a feasibility study. The fund is expected to launch by 2020.

The first Sharia-compliant fund supporting the “global energy transition” has been launched by London-based private equity firm Exergy Capital and Dalma Capital Management, the Dubai based firm offering Islamic investment solutions. The fund, which pursues a private equity style investment strategy, will invest in real assets, infrastructure and companies –predominantly in Europe – supporting the transition.