Responsible Funds, January 25: Federated says Hermes funds are top sellers

The latest responsible funds developments

Federated Investors, the US-based asset manager which now owns UK-based ESG specialist Hermes Fund Managers says its top-selling equity funds on a net basis during the fourth quarter of 2018 included three Hermes offerings: Hermes SDG Engagement Equity Fund; Hermes Global Equity ESG Fund; and Hermes Global Emerging Markets Small and Mid Cap Equity Fund. “Hermes’ ESG strategies, which invest with an emphasis on environmental, social and governance factors, were among Federated’s equity fund net-sales leaders in the fourth quarter, which highlights investor interest in these products,” said Christopher Donahue, president and chief executive officer.
German index provider Solactive has launched an index tracking Taiwan’s “top corporate sustainability practitioners”. The components of the Taiwan Sustainability Index are selected by evaluating over 300 questions covering social, economic, environmental and disclosure (SEED) criteria.
Nordea Asset Management is expanding its ESG ‘Stars’ range with European Corporate Stars Bond Fund under lead portfolio manager Jan Sorensen, who said the idea is to “exploit market inefficiencies by focusing on company specific research and ESG criteria to identify long-term changes critical to credit quality”.
Most Scottish local authority pension funds are opposed to pooling their assets in the style of England and Wales, a survey has reportedly revealed. Just 6% of attendants at the LGC Investment Seminar Scotland supported the option of pooling as outlined in a recent consultation, an option which is already being implemented by 89 funds in England and Wales.
The £60bn (€67.8bn) Universities Superannuation Scheme (USS), the UK’s largest pension scheme, is reportedly proposing a new valuation under which its funding shortfall, £3.8bn (€4.23bn), would be half of that proposed by a disputed 2017 valuation. The 2017 valuation led employers to propose closing the scheme’s DB component and sparked months-long protests across university campuses last year.
Impax Asset Management and the European Commission (EC) have each received a Circular award for their contribution to the circular economy at the World Economic Forum (WEF) in Davos.
Lombard Odier has committed to invest an undisclosed amount in Clarmondial’s Food Securities Fund through LO Gateway Development Finance, the Swiss bank’s impact investing fund funds. The Food Securities Fund counts on a guarantee from the United States Agency for International Development (USAID), through the Bureau for Food Security (BFS) and the Development Credit Authority (DCA). Link

The UK’s £40.8bn Northern LGPS, formerly known as the Northern Pool has launched its responsible investment policy. PIRC has been appointed to help it develop and implement the policy. The major ESG themes outlined in the policy are climate change, employment standards, audit reform, diversity, executive remuneration and tax. Its voting and engagement will be undertaken through the Local Authority Pension Fund Forum and Northern LGPS will recall stock that has been lent in order to be able to vote. Northern LGPS comprises of Greater Manchester Pension Fund, Merseyside Pension Fund and West Yorkshire Pension Fund.
BlackRock Cash Management has filed an initial registration statement for the BlackRock Liquid Environmentally Aware Fund (LEAF), a series of the BlackRock Funds, with the U.S. Securities and Exchange Commission. LEAF is a prime money market fund that will seek to provide clients with as high a level of current income as is consistent with liquidity and preservation of capital, while giving consideration to select environmental criteria.

 The Investment Association, UK asset management trade body, has launched the first industry-wide consultation on sustainability and responsible investment and one of the areas to be looked at is the development of a voluntary UK product label.

California pensions giant CalPERS earned -3.9% in 2018, according to a report in Pensions & Investments citing comments from CEO Marcie Frost at a board meeting. The fund is expected to report full year-end returns in February.
Aberdeen Standard is to scrap its ESG global equity fund due to limited growth prospects and a fall in assets, the investment manager has reportedly said in a note to shareholders. The Aberdeen Global – Responsible World Equity, which has $7.5m in AUM and is currently managed by Jamie Cumming, will be liquidated on February 15.

The Cummins UK Pension Plan has launched a fund for defined contribution (DC) members looking to invest their pension in alignment with Shariah Law. The fund seeks returns while not investing in alcohol, pork products, and other industries noncompliant with Islamic teachings (such as not investing in alcohol or pork products).
Insight Investment’s Global Farmland Fund Limited (GFF) has received Guernsey Green Fund designation – the green investment vehicle accreditation developed by the Guernsey Financial Services Commission last year.
Institutional Shareholder Services (ISS) and Apex, a fund administrator, have teamed up to deliver “cutting edge ESG reporting” to investment managers.
Women-led investment manager SKY Harbor Capital Management has launched a short maturity ESG US fund “to meet the growing demand for sustainability-focused fixed income, values-based investment opportunities”. The SKY Harbor Global Funds—Short Maturity Sustainable High Yield Bond Fund excludes fossil fuels and other controversial sectors, and is weighted towards companies with “the highest levels of relative sustainability reporting”.

Investec Asset Management has launched a sustainable equity fund for its UK clients. Run by Matt Evans, the Investec UK Sustainable Equity Fund will invest in UK companies “making a positive contribution to the future of society and the environment”, while seeking 3% outperformance of the FTSE All Share index per annum (gross of fees) over a full market cycle.

The African Development Bank Group has approved an equity investment of up to $25m in a private equity fund for renewable energy projects across Sub-Saharan Africa. The anchor investor in the $250m ARCH Africa Renewable Power Fund (ARPF) is ARCH Emerging Markets Partners Ltd, a London-based emerging market investment joint venture. The fund is expected to reach first close in early 2019.

The Land Degradation Neutrality Fund (LDN Fund), an impact investment fund managed by Mirova, has finalised its first transaction, investing in a program to restore degraded land in Latin America. The program, named Urapi Sustainable Land Use, seeks to reverse land degradation and combat climate change while promoting social inclusion. Investors in the fund, which reached first close at the end of 2018, include the European Investment Bank, BNP Paribas Cardif, and Natixis Investment Managers. The team is still raising funds to meet its targeted $300m.