Responsible Funds, Sept. 21: Passive investing is “incompatible” with sustainability — Robeco

The latest responsible funds news

Sustainability and passive investing are fundamentally irreconcilable investment philosophies, and investors must therefore choose one style or the other, according to Dutch asset manager Robeco. “However, because comprehensive sustainability integration involves many active decisions, it requires active portfolio management, active risk management and active performance evaluation techniques. As a result, investors find themselves in the active management space, whether they like it or not. Passive investing and sustainability integration are very different investment philosophies, and therefore difficult to unite.”

BlackRock has launched a diversity ETF, starting with an investment universe of over 6,000 stocks, media reports have confirmed. The iShares Thomson Reuters Inclusion & Diversity UCITS ETF will track the Thomson Reuters Global Large/Mid Diversity & Inclusion ex. Controversial Weapons Equal Weight index, with companies assessed on diversity, inclusion, people development and controversies reported. BlackRock said: “Given the emphasis on risk reduction associated with choosing companies with strong inclusion and diversity policies, investors may consider using [this ETF] as a satellite component within a global portfolio to help diversify their equity holdings.”

BlackRock has launched an ESG range of emerging market debt funds, using specialist benchmark indices created with JP Morgan. The range consists of the BGF ESG Emerging Markets Bond, Emerging Markets Local Currency Bond, Emerging Markets Corporate Bond and Emerging Markets Blended Bond funds. Link

The Catella Sverige Index (Catella Sweden Index) has changed its name to Catella Sverige Hållbart Beta (Catella Sweden Sustainable Beta), reflecting its new sustainability focus. The Swedish group says it is “transforming the fund into a sustainable fund”, investing broadly in the Swedish stock index SIXRX and screening out 19 companies, involved in fossil fuels, weapons and other sectors considered unsustainable.

Impact Shares has launched its third ETF – this time with an SDG focus, media reports have revealed. The Impact Shares Social Development Goals Global Equity ETF will track the Morningstar Societal Development index, made up of large and mid-cap firms with commitments on the SDGs, poverty reduction and other criteria. The ETF is priced at 76 bps and is managed by Chief Executive of Impact Shares, Ethan Powell.

The African Development Bank’s Sustainable Energy Fund for Africa (SEFA) has approved a $1m grant to catalyse private investment in Angola’s renewable energy sector.

The Meloy Fund I, LP – the impact investment fund supporting small-scale coastal fisheries in Indonesia and the Philippines – has reached final close at over $22m. Development bank FMO made a $5m commitment through the MASSIF fund, which it manages on behalf of the Dutch government.

AXA Investment Managers will launch a clean tech fund for UK investors at the end of the year, according to media reports. The fund will be managed by Amanda O’Toole, who was appointed co-manager of the £78m AXA Framlington Global Thematics fund in April, investing in clean tech linked to carbon emissions, water intensity, and waste and recycling.

The Althelia Sustainable Ocean Fund announced its first close having attracted investments from the European Investment Bank, AXA, FMO as well as family offices and foundations in the US through the Inter-American Development Bank and The Caprock Group.

Swiss asset manager re:cap global investors has entered into an agreement with Swedish wind energy firm Arise to buy a 45 MW wind farm for SEK70m (€6.8m). Arise will manage the construction and operation of the Sweden based onshore windfarm, which was acquired by re:cap for its institutional investor only Wind Infrastructure I fund.BNY Mellon has launched the Dreyfus Japan Womenomics Fund, investing in companies expected to benefit from a Japanese government initiative for improving workforce gender diversity. The Fund, which seeks long-term capital growth, is sub-advised by BNY Mellon Asset Management Japan, an affiliate of the Fund’s investment adviser, Dreyfus.

Three major Dutch pension managers are likely to participate in a class action lawsuit against German auto giant VW lined to the 2015 emissions scandal, according to industry magazine Pensioen Pro.

US SRI firm Domini Impact Investments has reportedly named US giant State Street as subadvisor for its underperforming $812.8m Domini Impact Equity Fund, replacing US fund manager Wellington, who has managed it since 2009. State Street will take over management of the fund – currently ranked 153 out of 191 Multi-Cap Core funds tracked by Citywire – from 1 December.

What’s claimed to be the first ESG fund to use “machine learning” has been launched by US investment manager, Richmond Global Compass Capital, who are seeking to raise $500m after receiving $20m in seed capital. The pioneering fund, which is advised by Harvard’s George Serafeim, uses artificial intelligence to identify material ESG factors across asset classes, including equities, credit, currencies, rates and commodities.

Swiss financial giant UBS has announced that its Global Gender Equality UCITS ETF has reached $140m in capital flows since its launch eight months ago, reflecting a growing interest in gender themed investment. The ETF is listed on the Swiss Exchange SIX and invests in companies in the Solactive Equileap Global Gender Equality 100 Leaders Index, an equity index of 100 leading global companies on gender diversity and sustainability.

UBS and the World Bank are offering debt notes providing exposure to firms performing well on ESG criteria. With a seven-year maturity and rated AAA/Aaa by Moody’s and S&P, the notes link to a Sustainalytics index of 100 UN Global Compact signatories. The notes will be available to UBS investment banking clients and its wealth management clients in the US and unspecified other locations until 22 October.

Nikko Asset Management has set up a Corporate Sustainability Department to bolster is ESG commitments. It will be overseen by Representative Director Junichi Sayoto and led by Stefanie Drews, Global Head of Product & Marketing and Head of Corporate Sustainability. Nikko is one of Asia’s largest asset managers, with US$220bn under management.

The East Capital China Environmental Fund has been accepted on the Luxembourg Green Exchange (LGX) – the Luxembourg Stock Exchange’s platform for sustainable financial instruments. The fund, a Luxemburg domiciled UCITS vehicle, was launched in 2007 and was awarded the LuxFLAG Climate Finance Label – an LGX accredited label – in 2016. Karine Hirn, Partner of East Capital, said the listing “sends a strong message to investors that our fund is entirely about investing into green companies”.

Germany’s DWS Group said it launched an ESG exchange-traded fund available in the US called Xtrackers MSCI EAFE ESG Leaders Equity ETF. This followed the launch of its ESG money market fund in the US, called DWS ESG Liquidity Fund. The new ETF will be based on the MSCI EAFE ESG Leaders Index, intended to provide exposure to companies with high ESG performance relative to their sector peers, excluding the US and Canada.

A thematic investment strategy, which combines long positions in clean energy companies and short positions in fossil fuel stocks, has been launched by FFI, Clean Edge and Alpha Vee Solutions.