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Responsible Funds, February 23: New Zealand Super reports 19.8% return in 2017

The latest responsible funds news

The NZ$37.9bn (€22.5bn) New Zealand Superannuation Fund has reported a 19.8% return for 2017. Chair Catherine Savage said the fund’s board remains committed to long-term, growth-oriented investment strategies and an “opportunistic approach to active investment”. It expects returns to “normalise” over the long term to around 8% a year. Outgoing CEO Adrian Orr said: “Our independent governance, transparency and commitment to investing responsibly have also helped to establish the Guardians [the fund’s board] as a credible institution, and are acknowledged globally as sector-leading.”

Sustainable funds have outperformed so far in the early-February market downturn, fund data group Morningstar says. A group of 221 sustainability-oriented funds experienced lower volatility in the first nine days of this month, while the S&P 500 fell 7.15%. The funds included in the group were those identified as using ESG criteria in investment, or emphasising sustainability-related themes or sustainable impact alongside financial return. Jon Hale of Morningstar comments in his piece that ESG-led funds tend to lean towards “higher-quality companies that hold up better during market turbulence”.

Private equity giant KKR is to launch an impact investing fund, according to reports. KKR Global Impact Fund was registered in Luxembourg on February 7. The New York-based firm joins the likes of Bain, TPG and Goldman Sachs in an expanding group of companies raising capital for ESG impact investments. The firm’s target for the fund remains unclear.

The Fonds de réserve pour les retraites (FRR), France’s pension reserve fund, has announced that it will “extend the decarbonisation of its portfolio and increase the proportion of its investments having a social and environmental impact” in conjunction with the release of its 2017 performance result. The fund will probably issue a tender for impact investing in 2018 according to an interview with Olivier Rousseau, an executive board member. Currently, FRR has approximately €400m (£354m) allocated to ESG mandates representing just over 1% of its assets.

Triodos Bank has announced the issue of fixed-rate bonds to raise £5m for UK charity Thera Trust for the purposes of purchasing up to 15 homes for 25 people with a learning disability. The five-year bond offers a 5.5% gross interest per year with a minimum investment of £100m. The offer is scheduled to close on April 27, 2018 with 3% raised at press time. Triodos had previously raised £2m for the charity in 2015 through bond issue. Link

AXA IM Framlington Equities is reorganising its global internal research to incorporate five thematics identified as key to long-term growth opportunities derived from long-term demographic trends and technological developments. These are automation, the connected consumer (the e-commerce value chain and digital transformation), aging and lifestyle (opportunities of extended life expectancy), clean tech, and transitioning societies (economic inclusion and changing consumption patterns both in developed and emerging markets).London-based asset manager Sarasin & Partners has launched a new climate focused endowment strategy for charities. The Climate Active Endowment Strategy – which uses divestment and engagement to “protect and enhance capital” – will be available to charities via the UK’s first registered Charity Authorised Investment Fund (CAIF). It seeks long-term capital growth with a total return target net of fees of + 4.5% per annum over five years or more. In October 2017, Sarasin had a mandate to run Bristol University’s £66m (€74.8m) endowment terminated following a re-tendering by the university in the west of England to include climate considerations.

A new innovation fund launched by the UK and US will aim to support technological projects that help improve and save lives in conflict zones. The £11m Challenge fund will provide grants of up to £150,000 to start-up projects, and up to £600,000 to successful established projects. The fund is the latest in a series of “Humanitarian Grand Challenges”, which have previously backed projects developing low-cost microchips to diagnose diarrhoeal diseases and an electronic nose that detects tuberculosis on patients’ breath. DFID and USAID each provide £5.5m to the fund, which will be administered by Grand Challenges Canada.

Impact investment fund The Livelihoods Fund for Family Farming is investing €1.3m in a project that aims to preserve water, boost organic farming and food production, and improve revenue for farmers in Rio de Janeiro. The project is intended to enable small-scale farmers in Tinguá – one of Rio’s key water catchments – to adopt a 100% chemical free agriculture, becoming Rio’s biggest organic food production hub. The project is supported by Danone brand Bonafont – which operates a mineral water factory in Tinguá – and the Brazilian SME’s development agency the Sebrae.

Australia: Consulting firm Mercer will reportedly exclude investments in companies involved in the manufacturing of tobacco products and controversial weapons by end-2018. The decision will result in divestment from 17 tobacco companies and nine controversial weapons companies with an estimated cumulative value of $110 million. In applying this policy, Mercer will be excluding companies manufacturing tobacco, in addition to the existing exclusions for controversial weapons (cluster munitions, landmines, chemical and biological weapons, and nuclear weapons). The exclusions do not apply to tobacco retailers.

Phaunos Timber, the UK forestry fund that is being wound up, has made an initial cash distribution of $25m to shareholders, as confirmed in its second quarterly shareholders’ update. The update announces the completion of the finance and operations management handover from Stafford Capital Partners in February with the appointment of a COO/CFO. Pre-disposal processes of its New Zealand and South American forestry interests and liquidation of Phaunos Boston Inc, Phaunos Norge AS and other dormant subsidiary entities is under way.