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Responsible Funds, July 12: US sustainable funds get $8.9bn inflows in first half — Morningstar

The latest responsible funds news

Morningstar has reported that flows into US-based sustainable funds and ETFs have already exceeded the sum total for last year. The annual flows for 2018 was recorded at $5.5bn while flows for the first half of 2019 is estimated to have reached $8.9bn.

Legal & General’s climate-tilted £4.4bn (€4.9bn) Future World Fund has been announced as the default option for the DC scheme of Pace, UK consumer co-operative The Co-op’s £11bn pension scheme which will result in inflows of approximately £290m into the fund. LGIM recently axed Exxon and four other climate laggards from the fund under an “engagement with consequences” approach. The Fund made headlines upon launch after being seeded with £1.85bn (€2.06bn) from HSBC UK’s DC pension scheme although other investors have not been publicly disclosed.

Amundi and the European Investment Bank (EIB) have launched a program to provide market financing for SMEs and small-scale green projects who are unable to access the existing green bond market. The Green Credit Continuum programme aims to raise €1bn within three years, including a €60m initial commitment by the EIB, and will invest in green high yield corporate bonds, green private debt and green securitised debt.

Nordea Liv & Pension Sverige, the pensions arm of Nordic banking group Nordea, has divested SEK22bn ($2.34bn) worth of carbon intensive assets and reinvested the capital in according to a company statement. The exercise – undertaken in the first half of this year – has slashed the carbon footprint of its portfolio by approximately 50%.

Fund EcoMarket, the retail SRI fund tool founded by Julia Dreblow, the former SRI Marketing Manager at Friends Provident and director of UKSIF, has seen its usage treble over the last 12 months. Dreblow said traffic on the site, which is aimed at IFAs and other intermediaries, has risen to more than 9,000 ‘unique users’ – up from 3,100 a year before.

Investors including Merseyside Pension Fund, global insurer QBE and Guy’s and St. Thomas’ Charity have invested in Bridges Fund Management’s Social Outcomes Fund II, which attracted commitments of £35m. It is Bridges’ second fund dedicated to social outcomes contracts where government commissioners pay for measured improvement in social outcomes.

A Vanguard ETF marketed as fossil free is investing in oil and gas companies, according to the Financial Times. At the end of May, 1.4% of the Vanguard ESG US Stock ETF’s assets were invested in oil and gas firms, including Schlumberger, Kinder Morgan and Marathon Petroleum. The fund tracks the FTSE US All Cap Choice Index, which screens out firms that own fossil fuel reserves, but not oil service companies and refiners. Vanguard was quoted as saying it was “working to update the description to better reflect the index methodology and exclusions”.France’s Natixis and real estate fund manager ICAMAP have closed what they say is the first green equity bridge financing transaction, amounting to €100m for low carbon real estate development fund ICAWOOD. The proceeds will be earmarked for developing low carbon offices in the Greater Paris region. The transaction is compliant with the Loan Market Association’s 2018 Green Loan Principles and has received a Second Party Opinion from Vigeo Eiris.

The £54.1m Legal & General Future World Gender in Leadership UK Index Fund (GIRL) recently attracted its first unnamed institutional investor from the academic/education sector. The GIRL fund, an equity product that tilts towards companies that score more highly on gender diversity, celebrated its first birthday in June.

German asset manager Assenagon has launched an ESG-focused credit fund which integrates negative screening, ESG assessment and engagement in its investment approach. Assenagon Credit ESG, developed in collaboration with Swiss bank BLKB, is a Luxembourg-domiciled strategy that will invest in corporate bonds, credit derivatives and crossover credits.

Octopus Energy Investments, a specialist clean energy investor and part of Octopus Group, has rebranded as Octopus Renewables to “more accurately reflect the business’s mission to accelerate the transition to a future powered by renewable energy”. Octopus Renewables is Europe’s largest investor owner of solar power and a prominent investor in onshore wind.

High-yield bond manager SKY Harbor has been awarded the LuxFLAG ESG Label for its Sustainable High Yield Bond Fund that launched at the end of 2018. The fund excludes fossil fuels, tobacco, alcohol, gambling and adult entertainment sectors and is weighted towards companies with a good level of sustainability reporting.

French asset manager Meeschaert has launched two funds focused on companies expected to benefit from the transition to a low carbon economy. The group has launched one bond fund and one equity fund – called the MAM Transition Durable Obligations and the MAM Transition Durable Actions – in collaboration with “external industry experts”. The funds select companies that are well-positioned for a 2°C scenario, including leaders in carbon-intensive sectors, as well as those that are providing solutions for the transition.

DWS Group, the listed fund manager that is 80% owned by Deutsche Bank, has expanded its range of sustainable corporate bond funds. DWS Invest ESG Euro Corporate Bonds focusses on Eurozone investment grade corporate bonds and applies DWS’s “ESG minimum standards”. It is managed by Karsten Rosenkilde, who also runs the €2bn DWS Euro Corporate Bonds offering.