Responsible Funds, February 9: BlackRock ‘seeking capital from pension funds for $10bn long-term fund’

The latest responsible funds news.

Blackrock’s CEO, Larry Fink, has expressed his intention to move the asset management giant into the private equity market, stating that he is looking to raise over $10bn for direct “patient capital” investments in companies, according to the Wall Street Journal. The report said the new vehicle — BlackRock Long-Term Private Capital — is currently seeking capital from sovereign-wealth funds, pensions and other big investors. The project is being overseen by Mark Wiseman, the former CPPIB chief and champion of long-term investment who joined BlackRock in 2016.

The passive giant has also launched an ESG-focused version of a semi-active European equity fund with Dutch pension fund SCA, according a report in IPE. The €450m Dutch scheme of Swedish multinational firm Essity has contributed around €50m to the fund, which excludes companies that do not comply with the ten UN Global Compact Principles. Another pension fund has joined in, but its name has not been revealed.

AP2 – the second of Sweden’s four state pension buffer funds – has reported a total return of 9.1% for 2017, with its assets rising to SEK 28.8bn (€2.8bn). CEO Eva Halvarsson attributed the results to the fund’s “long-term strategy” and “intensive” work in “the area of sustainability”. AP2 said: “An important step in integrating sustainability as part of the investment decisions is that we have continued to implement ESG (Environmental, Social and Governance) in the global equities asset class in our internal quantitative management. It is approximately 29 per cent of the total portfolio and amounted to SEK 99 billion at year-end. During 2017, we designed two new so-called multi-factor indices where, ESG is the most important factor for the weighting in the indices.”

ESG quant house Arabesque say its Arabesque Prime offering returned +4.63% during January while its Arabesque Systematic offering returned +4.86% – its benchmark the MSCI ACWI, returned +5.64%. Since inception in August 2014, Prime has returned +29.31% whilst Systematic has returned +36.52%. The technology and industrial sectors contributed the most to both funds’ absolute returns, the firm said.

US-based TriLinc Global Impact Fund has announced an additional $27.9m in impact financing to companies operating in Sub-Saharan Africa, Latin America, Southeast Asia, and Emerging Europe. It brings its total financing commitments – which aim to generate business expansion and socioeconomic development through term loans and trade finance facilities – to $392m.

Big Society Capital has launched a £30m social impact fund for organisations lending to small UK businesses that create positive social impact in their local communities. The Community Investment Enterprise Facility, which will be managed by Social Investment Scotland, will initially invest in up to five Community Development Finance Institutions (CDFIs) across the UK that helped develop the facility.

Big Issue Invest, the social investment arm of The Big Issue, has revealed that its Outcomes Investment Fund has made its first investments. The fund – which is seeded by Big Society Capital – has invested in St Mungo’s and Changing Lives, charities that provide specialist support services for homeless and vulnerable people across the UK.Baillie Gifford, the Edinburgh-based investment firm, has lost £9bn in pension fund assets between 2015-17, as clients switch to lower cost passive funds, according to the Financial Times. Senior partner, Charles Plowden is quoted as saying he has witnessed underlying outflows of 10% per year from its pension fund clients, which account for 60% of its business. The company is also reportedly considering more versions of its new socially responsible open-ended fund, the Positive Change fund, which launched in July.

Alberta Investment Management Corporation (AIMCo), the C$100bn (€64.7bn) Edmonton-based fund manager, has entered in to a partnership with Enel Green Power North America, the US based renewables firm, to acquire a 49% equity interest in two Alberta-based wind energy projects, Riverview and Castle Rock Ridge II Wind Farms.

The Church Investors Group, the UK faith investment group representing asset of £17bn, has tightened its voting policy around executive remuneration, gender diversity, and climate change, as it prepares to take a harder line in the forthcoming AGM season. The ramped up guidelines include: withdrawing support for remuneration reports where pay ratios are not disclosed or the Chief Executive pensions are excessive; voting against the re-election of nomination committee chairs where the board has less than 33% women; and, voting against the re-election of the company chair when a company is making little progress to transition to a low carbon world.

Investment giant Deutsche Asset Management has merged its ESG-focused bond strategy into a global fixed income fund, following the departure of its manager Dirk Aufderheide, Citywire reports. The DWS ESG Global Government Bond fund has now been rolled into the Deutsche Invest Global Bonds High Conviction fund. A spokesperson is quoted as saying that the high conviction fund will have more potential in the future as the firm continues to convert other bond funds into ESG-focused strategies. In January 2018, the firm gave its €2bn Deutsche Invest I Euro Bonds fund an ESG rebrand, becoming the Deutsche Invest I ESG Euro Bonds.

UK-based social impact investment company Resonance has launched a regional poverty alleviation fund focusing on the west-midlands. The Resonance West Midlands Social Investment Tax Relief (SITR) Fund – which has already secured £1m of commitments – is dedicated to tackling poverty and disadvantage across the region.

Davy Asset Management, the €3.7bn Irish asset manager, has reportedly expanded its ESG range with the launch of an ex-fossil fuels fund this month. The new mandate will avoid companies that profit from the extraction and burning of fossil fuels. It aims to achieve long-term capital growth by investing globally in companies that make a positive contribution to society and/or act to safeguard the environment. The fund will hold 50-70 companies and will invest up to 20% in emerging markets.