Responsible Funds, June 15: Goldman, Brunel, GRESB, Perpetual, Rathbone, Norfund

The latest responsible funds developments

Hedge fund manager Paul Tudor Jones and Goldman Sachs have reportedly launched a new ESG exchange traded fund (ETF) designed to invest in companies that are “driving positive change”. Goldman Sachs Asset Management and Just Capital, a non-profit organisation set up by Jones hoped that the ETF would help promote “positive change in corporate behaviour”. The ETF, managed by Goldman, will track Just Capital’s US Large Cap Diversified Index, based on the Russell 2000 benchmark and feature companies that score well on ESG.

Reitsmarket, the Luxembourg-based real estate boutique offering global quantitative res is launching a euro-denominated global sustainable REITs index, the first index to result from a venture with GRESB, the real estate/sustainability data provider. The index tracks specific factor trends in 30 real estate securities in developed markets (North America, developed Europe and developed Asia Pacific). GRESB uses “objective ESG performance” to determine the eligibility of REITs which include the quality of ESG disclosure among others. The administrator of the index is exchange group Euronext. Link

Australia: ASX-listed Perpetual Investment Management has launched the Perpetual Ethical SRI Credit Fund. It will balance predominantly investment grade ‘core’ assets with a smaller allocation to high yield and unrated securities. Portfolio Manager and Head of Fixed Income, Vivek Prabhu, said, “This is a new investment strategy that meets the demands of our clients. It is one of the first floating rate credit funds in Australia combining a social responsibility lens and investment performance.” Supporting documents show that sovereign issuers will be analysed on ESG factors, based on a scoring system utilising research from external specialists.

CMS Energy, a Michigan-based energy provider, has entered into the first syndicated sustainability-linked revolving credit facilities in the US. The $1.4bn RCF will enable CMS to reduce interest rates by meeting renewable energy generation targets, which include cutting out coal from electricity generation and reducing carbon emissions by 80% by 2040. Barclays, J.P. Morgan, MUFG, Mizuho and BofA Merrill Lynch acted as Joint Lead Arrangers for the facilities. Barclays acted as Sustainability Structuring Agent.

The Kresge and Rockefeller foundations have put out a call for letters of inquiry (LOIs) for fund managers establishing new Opportunity Funds. The foundations seek partnerships with fund managers who intend to make investments with a social impact to communities of people with low incomes, will deliver promised returns to investors and will evaluate the impact of investments over time. Kresge CEO and President Rip Rapson said: “In the early days of any new market there is an opportunity to define what products will come forward and who they will benefit. Philanthropy can help catalyse the kinds of investments that will truly be a benefit to communities.”Brunel Pension Partnership, one of eight asset pools formed by UK local authority pension funds, has appointed Luxembourg-based FundRock Management Company as its Authorised Contractual Scheme (ACS) Operator for £7.5bn of actively managed equities. The £28bn investor cited the tax transparency provided by the ACS model, in addition to flexibility and cost control as the basis for this decision. Under the arrangement, Brunel acts as a sponsor and investment manager while FundRock will meet regulatory requirements, contractual agreements and manage risk. FundRock is owned by private equity house BlackFin, which is a signatory to the Principles for Responsible Investment.

Rathbone Unit Trust Management will be launching the Rathbone Global Sustainability Fund, which aims to beat the FTSE World index over a minimum of five years. The multi-cap fund, due to be launched next month, will invest in companies aligned with the SDGs and will incorporate screens provided by sustainable investment arm Rathbone Greenbank Investments. The fund will follow a similar strategy to Rathbones’ income team, focussing on companies with high levels of cash-generation.

Cube Infrastructure Managers, a specialist Luxembourg investor, has announced a €358.5m first closing of the cross-border Cube Infrastructure Fund II (Cube II). The fund will address the essential infrastructure needs of local public authorities within the EU through brownfield asset investments, and aims to generate a combination of current yield and long-term capital appreciation. The European Investment Bank is contributing €100m under the Investment Plan for Europe (‘the Juncker Plan’).

Record Currency Managers has been accepted as a signatory to the PRI, one of the first dedicated current managers to do so. James Wood-Collins, its Chief Executive, said that the firm will be exploring “opportunities to integrate these (ESG) issues into investment decisions”, although conceding that the unique “nature of the portfolios” may bring particular challenges.

Norfund, Norway’s Development Finance Institution, has launched a new NMI fund to celebrate 10 years of microfinance investments. NMI Fund IV has already received commitments of NOK 850m (€90m) and NMI aims for the fund to reach NOK 1bn (€106m). This new fund will promote financial inclusion for people living in poverty in Africa and Asia.

The International Finance Corporation (IFC) has invested $75m in the first emerging market gender bond by Turkey’s Garanti Bank. With a six-year term maturity all the financing raised though the issue is earmarked for on-lending to Garanti’s women-owned small businesses. The issue is expected to triple the number of loans to these clients over the next five years.