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Responsible Funds, August 26: ESG fund launches from BlackRock and Morgan Stanley

The round-up of the latest responsible funds news

BlackRock has launched the BlackRock Impact Bond Fund, a mutual fund investing in measurable social and environmental outcomes. Trading under the ticker BIIIX, it’s the first broadly available US fixed income fund launched by BlackRock since the formation of BlackRock Impact, the firm’s $200bn sustainable investing platform. It will invest in bonds of companies with “positive aggregate societal impact outcomes” such as corporate citizenship, high impact disease research, greenhouse gas emissions, ethics controversies, and litigation. It will be benchmarked against the Barclays U.S. Aggregate Bond Index and run by BlackRock’s Model Based Fixed Income team with Scott Radell as portfolio manager. Link

Morgan Stanley Investment Management, the fund firm with $406bn under management/supervision has launched two new multi-asset funds – the first in its ‘Global Balanced Risk Control’ (GBaR) range to incorporate environmental, social and governance (ESG) factors. The two new offerings are the Morgan Stanley Investment Funds (MS INVF) Global Balanced Fund and the MS INVF Global Balanced Defensive Fund; they will be managed by Andrew Harmstone and Manfred Hui in London. Harmstone said: “We expect the integration of ESG considerations into the process to further improve potential returns and enhance risk management.”

FMO, the Dutch Development Bank, says it has closed a US$100m syndicated loan for Banco Continental in Paraguay in a move that it’s hoped will aid the financing of sustainable investments and job creation. The loan was co-arranged with Banco Latinoamericano de Comercio Exterior (Bladex) and has an A/B structure with 11 participants. Members of the A tranche include the Belgian Investment Company for Developing Countries (BIO), Triodos Investment Management and the FMO who provided an aggregated amount of US$47m.

Unigestion has launched its first low-carbon strategy, on behalf of an unnamed client. The mandate has been awarded by a “meaningful institutional investor”, according to Unigestion’s Responsible Investment Coordinator, Eric Cockshutt. Cockshutt was unable to disclose the amount, but said it would come in four tranches – the first of which was invested this week. All the funds will be invested immediately, he added. Unigestion is a Geneva-based asset manager, which manages some $20bn. It has offices across Europe, the US, Canada and Singapore. This is its first low-carbon mandate, but all its mainstream listed equities are ESG-screened and assessed for carbon intensity*Major French investors have piled* in on a new €425m fund that will invest in the energy transition. Allianz France, Aviva France, BNP Paribas Cardif, Crédit Industriel et Commercial, the French Reserve Fund, Pro BTP and Société Générale Insurance all participated in the close of the Meridiam Transition Fund, launched by French asset manager Meridiam and personal insurer CNP Assurances. The fund, which was first announced at COP21, will focus on long-term infrastructure investments across Europe that are “dedicated to environmental and energy transitions”. It will favour mid-sized greenfield projects within energy efficiency and renewables, with a time horizon of 20 years, it said.

Triodos Bank has released its half year results showing a 4.1% growth of its loan book and a 7% increase in equity to €835m. The new Managing Director of Triodos Bank UK, Bevis Watts, said: “A continued growth in our lending means we’re supporting organisations that have a positive impact on society and the environment. We continue to trade profitably and grow and against a backdrop of a fast moving world and an uncertain economic outlook.” The bank made a net profit of €18.6m.

Allegheny County in Pennsylvania has voted to invest a portion of its pension fund in a broadly diversified, sustainable and carbon-efficient exchange-traded fund (ETF) known as the Etho Climate Leadership US ETF.

UK social sector bodies have raised concern that the Big Lottery Fund (BLF), an independent public body funded by the UK National Lottery, will become too aligned with government policy on social investment. The Big Lottery Fund, which makes grants to support UK communities, makes independent funding decisions but is directed by government on strategy. This summer, the government proposed the first new set of directions since 2012. It includes proposals that the fund should support social investment as a means to improve sustainability and impact. Third Sector reports that social sector body the Directory of Social Change rejects this idea, saying social investment is government policy, and is dealt with by Big Society Capital.

Neil Woodford, founder of Woodford Investment Management, has announced that he has scrapped bonuses at the asset management firm, arguing that they are “largely ineffective” for boosting performance in favour of a rise in basic pay and benefits. Former Invesco star Woodford, whose fund manages some £14bn of clients’ money, said that little proof had been found to suggest bonuses were an effective motivator and that some studies suggest they “can lead to short-term decision making and wrong behaviours”.