Funds round-up: Apollo closes impact fund on $1bn

The latest developments in ESG-related funds: Amundi launches euro government tilted green bond ETF; BlackRock announces transition fund targeting materials sector.

Apollo Global Management has closed its Impact Mission Fund on around $1 billion, according to affiliate publication New Private Markets. This is Apollo’s first dedicated impact strategy, which seeks to invest in later-stage companies “with a high degree of intentionality around impact”. While the fund’s original target size was not disclosed explicitly, it was reportedly thought to be between $1 billion and $1.5 billion. Investors include Japan’s Norinchukin Bank, which invested ¥15 billion ($106 million; €98 million) in April 2022, and the New York State Common Retirement Fund, which committed $150 million in December 2021, according to NPM data.

Amundi has launched a Euro Government Tilted Green Bond UCITS ETF. The Article 8 fund enables investors to shift their core euro government bonds towards a responsible exposure. The Article 8 ETF tracks the Bloomberg Euro Treasury Green Bond Tilted Index but will contain a higher proportion of green bonds, amounting to at least 30 percent of the fund.

BlackRock has launched a transition fund targeting the materials sector, which includes companies engaged in metals and mining, chemicals, steel and construction materials. The BlackRock Global Funds (BGF) Brown to Green Materials fund aims to provide exposure to materials that are essential to the energy transition and to opportunities created by decarbonising materials supply.

The Article 8 fund will invest in materials companies with plans to reduce emissions intensity over a set period, firms supplying materials required for lower-carbon technologies, and green companies that are leading on emission reductions. It will invest at least 80 percent of total assets in the equity securities of global companies that produce materials required to build lower-carbon technologies, and materials companies reducing their own emissions intensity.

There is no performance trade-off associated with ESG funds over the medium and long term, according to Morningstar research. The index provider found that over three, five and 10 years, an average ESG fund beats its average traditional peer. The analysis – which examined nearly 8,000 European funds over the past one, three, five and 10 years through December 2022 – said that while ESG funds lagged traditional funds in 2022, the odds of picking a winning ESG fund with high excess returns relative to traditional peers increases as the holding period extends.

Mediolanum International Funds, the European asset management platform of Mediolanum Banking Group, has launched a sustainable nutrition fund. The Best Brands Future Sustainable Nutrition fund will target companies focused on the transition to a more sustainable nutrition value chain. The Article 8 fund will be managed by Pictet and BlackRock. The former will invest in companies that produce high-quality food, deliver it efficiently and minimise waste, while the latter will focus on companies active in decarbonising the food chain and providing more sustainable and healthy food options.

Finnish pensions giant Ilmarinen Mutual Pension Insurance has invested a total €2.7 billion in climate-focused iShares ETFs launched by BlackRock in the US and Japan. The pension fund invested €2 billion in the US fund and €745 million in the Japanese fund. The iShares ETFs track the MSCI Climate Action Indices, which select the top 50 percent of companies in each sector based on an assessment of climate considerations including current emissions intensity, emissions reduction targets, green business revenue and climate risk management.

Cambridgeshire and Northamptonshire pension funds have allocated £455 million ($582 million; €531 million) to Osmosis Investment Management’s Resource Efficient Core Equity Strategy to implement two customised global equity portfolios based on the strategy. Osmosis’s strategy – which replicates MSCI’s World Index – overweights companies identified by the manager as resource-efficient and underweights companies that are resource-inefficient.

The selection and implementation of both strategies align with the individual climate objectives of the local government pension schemes (LGPS). The strategies will be constructed by Osmosis, with UBS Investment Management acting as investment manager, under the current LGPS framework for passive investment management services. Northern Trust will act as the transition manager.

Danish pension fund AP Pension has invested €75 million in Morgan Stanley’s 1 Gigaton (GT) fund, which aims to reduce carbon emissions by 1GT by 2050. The Article 9 private equity fund targets companies looking to lower carbon emissions across sustainable food and agriculture, the circular economy, energy and transport.

WisdomTree has launched a renewable energy UCITS ETF. The Article 9 fund will track the WisdomTree Renewable Energy Index, which follows the performance of global companies involved in the renewable energy value chain and meet WisdomTree’s ESG criteria. To be eligible for inclusion, a firm must be involved in one or more of the following parts of the value chain: the building blocks of operating a renewable energy grid, including battery energy storage systems, network operators and recycling; suppliers of key commodities such as steel, copper, and aluminium; manufacturers of modules such as polysilicon for solar panels, blades and towers for wind turbines, and high-voltage cables for power transmission networks; companies generating renewable power; or firms producing new renewable energy technologies.

Spanish insurer Mapfre has launched a biomethane mutual fund alongside Abante, a financial consultant, and IAM Carbonzero, which will respectively act as fund adviser and energy sector specialist. The Energías Renovables II is targeting €100 million in its first phase, with the goal of constructing 20-25 power plants across Spain over five years. The project aims to address several core strands, including the decarbonisation of the planet, the energy crisis and the high dependence on imports of natural gas from abroad, as well as investment in the rural economy through agriculture and livestock farming.