Natixis to launch SRI ‘conviction’ funds in pursuit of sustainable alpha

Natixis Asset Management (NAM), the €304bn French funds house, is taking a major step for a mainstream manager towards targeting a clear ‘sustainability’ alpha (potential for outperformance) within companies by launching an SRI conviction European equity fund run by a dedicated portfolio team. The fund, which will be introduced next year, is to be run by a team of five under Suzanne Sénellart, portfolio manager at NAM. The team already runs about €1bn in assets and Sénellart is also co-portfolio manager with Clotilde Basselier of NAM’s Impact Funds Climate Change fund, which launched last year. Speaking to Responsible-investor.com, Philippe Zaouati, deputy chief executive officer and head of business development at NAM, and Emmanuel Bourdeix, director of equities, allocation and structured products, both members of the fund manager’s executive committee, said the new strategy would push NAM further than its current best-in-class strategy for SRI funds. Bourdeix said: “We are advancing the best-in-class concept, which is done by financial experts who then apply an extra financial check at the end. Instead, we want to start off with good ‘alpha generating’ ideas generated by our extra financial team and then check that they are good financial ideas. NAM currently has 10 SRI analysts in a team led by Hervé Guez, head of extra-financial research. Zaouati said: “There are lots ofpotential alpha generating ideas on the sustainability theme, you just need to have the right analysis. Importantly, we believe they could lead to a different kind of alpha that would differentiate the strategy from traditional fund performance.” Says Bourdeix: “The best-in-class ESG integration process is quite formally benchmarked and is basically sector neutral. If we are to be ESG engaged, however, we believe there may be certain sectors that we view very negatively. We want to develop a more active ESG research policy that would not necessarily be sector neutral, will be conviction based and will have higher risk budgets for investment ideas that are more important than the best-in-class funds generally done by the industry. We are also looking at the kind of benchmarks we might use, because this kind of approach doesn’t lend itself to the standard metrics.” NAM will also add to its global Impact Funds Climate Change fund with the launch of a specialist sister emerging markets climate change fund in the first quarter of 2011. The manager said it was hiring a new analyst to further emerging markets research within its climate change team. The Impact Funds Climate Change fund already invests about 20% of its portfolio in emerging markets companies, but the manager said it had identified greater scope for expanding this universe of investments into a dedicated portfolio.