Responsible Funds, January 6: Unilever, Robeco, Pax World, Schroders, EFG Hermes

The latest responsible funds news

One of Unilever’s Dutch pension funds, Progress, will use sustainable indexes to benchmark its investments. Progress, with €5bn in assets and closed to new entrants since April 2015, will use the so-called STOXX Europe Industry Neutral ESG and STOXX North America Industry Neutral ESG 150 indexes, licensed by Deutsche Boerse Group’s STOXX arm. The universe for such sustainability indexes is the STOXX Global 1800 Index, from which Sustainalytics, also part of the deal, will filter out companies it considers to be non-compliant with the UN Global Compact Principles or involved with controversial weapons. Michael Kaal, Chief Risk Officer at Progress said: “We are conscious of our social responsibility as an institutional investor.” He added: “The fund takes account of the interests of its members, pensioners and employers and seeks to be accountable to them for the decisions it makes.”

Dutch fund manager Robeco has worked with sister firm RobecoSAM to launch a new sustainable equities fund. The Robeco QI Global Sustainable Conservative Equities fund aims to offer “a significantly better sustainability profile than the reference index, the MSCI World All Country”. The Luxembourg-domiciled fund will be managed by Pim van Vliet’s Conservative equities team in Rotterdam. Robeco has also renamed its venerable Robeco NV fund to “position itself for changing market circumstances”. The €2.8bn fund was launched in 1933 and is Europe’s oldest equity fund; it will be renamed to Robeco Global Stars Equities Fund NV.

Schroders’ Global Climate Change Equity Fund returned 1.9% in the year to December, against a benchmark of 5%. The $226.5m fund, which was launched in 2007 and has 63 holdings, significantly underperformed the MSCI World, according to data expressed at November 30. Since launch, it returned 14.4% compared with 30.2% from the benchmark. The fund is managed by Simon Webber and Ben Wicks.

Vortex, a renewable energy platform managed by Egypt’s EFG Hermes’ private equity arm, has agreed to buy a portfolio of 24 operating solar projects in the UK – representing 365 MW – from Nasdaq-listed clean energy firm TerraForm Power. The transaction is valued at approximately $580m. “This portfolio offers us an attractive entry point with a long-term investment proposition in the country,” said Karim Moussa, EFG Hermes’ Head of Private Equity. Vortex intends to refinance the existing non-recourse project debt facility with a new upsized facility and will enter into new contracts with Lightsource Renewable Energy.US SRI firm Pax World Management has expanded its investment offerings with the launch of three new mutual funds in two core asset classes: domestic large cap equity and investment-grade fixed income. The new funds are: Pax Large Cap Fund (a “high conviction strategy” that integrates ESG research into the stock selection process and focuses on companies with attractive earnings growth potential, strong management and reasonable valuations); Pax ESG Beta Dividend (a “smart beta strategy” that is subadvised by Aperio Group; and Pax Core Bond Fund (an “investment-grade fixed income portfolio”). “With over $4bn in assets under management and more than four decades of experience, the launch of these new funds marks a point of arrival for Pax,” said CEO Joe Keefe.

The €294.2m RobecoSAM Smart Materials Fund returned 32.51% in November compared to a benchmark (MSCI World ND) return of 23.86% over the same period. The fund invests globally in companies using raw materials efficiently or recycling. Its largest holdings are based in the US – IPG Photonics Corp, PTC Inc and Hexcel Corp.

The UBS Emerging Markets Sustainable fund reported returns of 4.94% in the year to 30 November 2016, according to UBS Asset Management. The fund, with total assets of $15.83m, invests in equities of emerging market companies “that offer solutions to the biggest challenges of the 21st century” its Fact Sheet reads. The majority of the stocks are domiciled in China, Taiwan, South Korea, India and South Africa among others. The sustainable portfolio managers noted that an investment horizon of 5 years is required, as well as awareness of “the political and social challenges” faced by emerging markets.

Microsoft billionaire Bill Gates is leading a $1bn investment fund in clean energy via the new Breakthrough Energy Coalition (BEC) initiative. It will “invest in innovative companies to deliver the next generation of reliable, affordable, and emissions-free energy, agriculture, and goods to people around the world”.

The Jupiter Global Ecology Growth fund, which seeks to invest long-term in companies “responding positively to the challenge of environmental sustainability and climate change”, has underperformed the FTSE World. At the start of December, the €10m fund returned -1.5% over one year, versus its benchmark of 3.8%.