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Responsible Funds, April 20: UBS, Eurizon, Research Affiliates, DWS

The latest ESG fund launches and market news, bite-sized.

Swiss banking giant UBS has launched a new range of indices targeting high-grade development bank debt, such as the World Bank’s. It was created in partnership with German index provider Solactive. The Solactive UBS Development Bank Bond Index Family aims to capitalise on a “field of sustainable investment that has not been widely explored before”.
Eurizon Asset Management has launched an absolute return green bonds fund. Investing in investment grade bonds using criteria defined by the Green Bonds Principles, The Eurizon Fund – Absolute Green Bond fund is intended to promote green investment and combat issues such as climate change, overconsumption of natural resources, and pollution. Eurizon claims the move makes it the first Italian asset manager to launched an ESG-driven product specialising in international bond markets.
California-based Research Affiliates LLC has launched its own ESG smart beta strategy, promising to “help investors achieve the dual objectives of social responsibility and long-horizon outperformance”. It claims that the RAFI ESG strategy supplements “traditional ESG metrics by adding the dimensions of financial discipline and gender diversity”. The smart beta specialist also announced plans to launch a stand-alone diversity strategy later in 2018. In 2016, the firm launched two ESG indices – FTSE4Good RAFI Index and the FTSE RAFI Ex-Fossil Fuels Index – with FTSE Russell.
DWS has implemented a new rating system using the UN Sustainable Development Goals (SDGs), which aims to determine which corporations are advancing economic development, social inclusion and environmental sustainability in line with the SDG agenda. DWS includes MSCI’s ESG Sustainable Impact Metrics data into its broad ESG dataset, the ESG Engine. These measure the extent to which the products and services of specific companies support one or more of the SDGs both for listed equities and corporate bonds. DWSCIO for Responsible Investments Petra Pflaum said: “Our new SDG rating system significantly enhances our ability to differentiate issuers of equities and bonds based on their contribution to making the world a better place.”
Dutch social investor and worldwide cooperative Oikocredit has announced its 2017 financial results, reporting lower overall returns than previous years but growth in areas such as renewable energy and its capacity building programmes. The cooperative said the fall in the overall annual result — which came in at €18.4m, down from €29m in 2016 — was “largely due to negative exchange rate results”, and said it “continues to fulfil its ambition to improve the quality of life of low-income people”. Renewable energy, Oikocredit’s newest focus area, grew by 23% (€ 49m), to represent 5% of the overall portfolio.The Dutch government’s MASSIF Fund, which promotes the private sector as an engine for development in developing countries, has this month passed €1bn in total investments since its inception in 2006. The management of MASSIF was mandated to development bank FMO with an initial funding of €325m to finance SMEs. Over the last decade, a total of 425 investments have been made in 50 countries, which has helped to finance over one million micro-entrepreneurs, such as small traders, market women and smallholder farmers, and close to 50,000 SMEs. The fund has had an annual return of 3%, facilitating its expansion.
US SRI firm Calvert Research and Management has announced it is partnering with UK based engagement house Hermes Equity Ownership Services to “supplement Calvert’s in-house corporate engagement program”. John Streur, President and Chief Executive Officer of Calvert, said: “Our agreement with Hermes EOS provides Calvert immediate access to engagement activities outside the U.S. and further strengthens our current engagement in the U.S. By enhancing our global engagement program, we help Calvert clients achieve their responsible investing goals.”
M&G has launched has launched the first impact fund investing predominantly in private and illiquid debt. The new £44.5m (€51.46m) M&G Impact Financing Fund seeks to provide investor returns in excess of public bonds. Seed investors include M&G Prudential, Big Society Capital and The Swedish Foundation for Strategic Environmental Research. The fund has invested in the regeneration of the Greenwich Peninsula in London, US solar and financed UK housing associations. ESG research house, Sustainalytics, has collaborated with M&G on a methodology assessing the impact of the fund’s investment.
TAM Asset Management, a UK investment manager, has launched Greenfinch, a new non-advised investment platform, which provides its members access to discretionary investment portfolios and the opportunity to donate a percentage of annual profits to any of its partner charities under the You Give We Give (YGWG) donation scheme. TAM Asset Management then matches the donation with an equal percentage of their annual fee.
Foresight Solar Fund, a Jersey-registered independent infrastructure and private equity manager, has announced its acquisition of five operational UK based solar parks at a cost of £36.6m. The acquisition was funded through fund’s revolving credit facilities and takes its total outstanding debt to £276.2m. Its portfolio now consists of 27 solar assets with a net installed capacity of approximately 674 MW.