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Responsible Funds, July 5: Christian Brothers Investment Services, Keva, Morgan Stanley IM, Vanguard, Bridges Israel

The latest responsible funds news

Christian Brothers Investment Services (CBIS), the US faith investment group, has launched the CUIT Magnus Funds, a series of four pooled investments vehicles designed to provide comprehensive investment management. The CUIT Magnus Funds line-up features conservative, core and aggressive offerings based on risk exposure with each fund including active and passive components. CBIS’ program of Catholic Responsible Investing incorporates both screening and corporate engagement strategies based on the moral and social teachings of the Catholic Church.

Keva, Finland’s €51.9bn local government pension institution, has appointed MSCI ESG Research to develop an “integrated ESG analysis system” to “supplement” the fund’s existing portfolio tools, according to a contract notice. The cost of procurement for the new system, which will be used to analyse ESG data for both equities and fixed-income instruments globally, is €1.7m. MSCI was the only tenderer for the contract.

A new tool allows investors to review their mutual fund investments for holdings in weapon manufacturers, retailers and military contractors. Weapon Free Funds, released by nonprofits As You Sow and CODEPINK, covers 3,000 of the most commonly-owned US mutual funds from major asset managers and also contains alternative, socially responsible funds which do not “profit from war”. Mutual funds and ETFs commonly contain investments in weapons including cluster munitions (banned in 100+ countries).

An index tracking the performance of low volatility companies demonstrating the best commitment to energy transition has been launched by German index provider Solactive. Based on methodology developed by Natixis in collaboration with Sustainalytics and composed of 40 companies listed in developed markets, the Climate and Energy Transition Index first excludes the tobacco, weapons, fossil fuels and mining industries and then assigns companies a climate score. The best-ranked companies are further screened based on low volatility and high dividend yield.

Bristol University in western England has appointed consulting firm Mercer to provide fiduciary management services for its £300m defined benefit (DB) scheme, with ESG considerations written into the mandate. Four tenders were received for the five-year contract, worth £10m according to the documents. The DB scheme, which is currently in deficit (£80m in 2016), will switch to a defined contribution scheme from January 2020.

Nesta, an impact investor and innovation foundation, has released a report on the demand for social investment in the UK arts and cultural sector. The report finds that £309m (€349.2m) of repayable finance (including secured and unsecured loans, overdrafts, blended grant-loan products, equity and other performance related debt) is expected to be sought over the next five years. The report builds on the impact of the Arts Impact Fund which has invested £7m (€7.9m) in 22 organisations over three years.

Norway’s NOK652bn (€68.6bn) pension provider Kommunal Landspensjonskasse (KLP) has made its first investment into forestry, media reports have confirmed. The pension fund manager invested SEK250m (€23.9m) into Swedish forestry fund Silvestica Green Forest, which plans to acquire woodland assets in the Nordic and Baltic regions. KLP’s director of strategic asset allocation Harald Koch-Hagen was quoted saying KLP may later increase its stake in the fund.Morgan Stanley Investment Management has added to its ESG offering with the launch of a low-carbon impact global equity portfolio. The Morgan Stanley Investment Funds Global Sustain fund also scores highly on third party-measured ESG factors, with restrictions against areas such as tobacco, alcohol, adult entertainment, and fossil fuels. The fund, according to reports, is a Luxembourg-domiciled Sicav and will be managed by the firm’s international $40bn equity team headed by William Lock.

US funds giant Vanguard has filed for two ESG exchange traded funds, according to reports. The Vanguard ESG US Stock ETF and Vanguard ESG International Stock ETF will track market cap-weighted indices provided by FTSE Russell, excluding industries such as weapons, fossil fuels, and the other “usual suspects”, then applying additional screening for criteria such as diversity, human rights and anti-corruption. The ETFs are expected to begin trading on Cboe BZX Exchange in September 2018 with expense ratios of 0.12% for the US exposure fund and 0.15% for its international exposure fund.

Australia’s Impact Investment Group (IIG) has reached first close on its Solar Asset Fund after securing commitments of $55m (€47m). The Australian impact fund manager’s second investment vehicle focused on photovoltaic development, the fund is forecast to yield an average of 8% a year in the first five years. IIG said it was aiming for a total fund equity of $110m (€94m). Independent chair of the fund Chloe Munro said: “We know that the market needs more generation capacity and new renewables are best placed to meet that demand. There is plenty of scope for future projects and this fund helps to keep growing the solar share of our energy mix.”

E Fund Management, China’s largest mutual fund manager and State Street Global Advisors have launched the State Street – E Fund Environmental Driven China A Strategy. The strategy is aimed at Chinese equity investors and selects companies which are “carbon-efficient, generate higher green revenues and have better environmental policies”. State Street Global Advisors and E Fund are both signatories to the UN-supported Principles for Responsible Investment.

HCT Group, a UK community transport operator, has secured £17.8m (€20.1m) worth of financing through ClearlySo, an impact investment bank. Investors in this round included Big Issue Invest, HSBC, TriplePoint and City Bridge Trust. The capital will be used to grow the transport provider’s existing fleet of 732 vehicles. HCT Group has grown 40% since the previous round of fundraising, according to its CEO.

Bridges Israel, a sister body to Bridges Fund Management in the UK, has reportedly launched a $50m social-investing fund aimed at serving Israel’s underserved. The fund – Bridges Israel’s first – will invest in companies in underprivileged communities and in tech companies that address social and environmental issues. Israeli bank Discount Capital acted as anchor investor, alongside further backing from Israeli institutional investors and private investors from the UK, US, Australia and Israel.