Responsible Funds, June 20: US asset management giant Federated to advise Sharia fund

Federated Investors, the New York-listed asset management firm with $366.2bn (€269.5bn) under management, has been named as sub-advisor for the Azzad Wise Capital Fund, the pioneering US Sharia-compliant fund that was launched in 2010. The fund invests in Sukuk (“Islamic bonds”) and Islamic bank deposits as well as Islamic banks as part of a socially responsible investing mandate. It is offered by Virginia-based Azzad Asset Management.

The UK government has announced a £60m (€75m) investment to help social ventures access finance. The investment will come from the loan book of a fund called Future Builders. “This investment is specifically ring-fenced to support social ventures who have high potential but struggle to access finance, and who could benefit from business capacity building support in preparing for bidding for social investment,” the government said. It will be based on the Cabinet Office’s pilot £10m Investment and Contract Readiness Fund, where social ventures received £38 for every £1 of government grant. Link

The government also announced two new social impact bonds (SIBs). The first aims to reduce loneliness among over 50s in Worcestershire to reduce dependency on health and social care services and is the first SIB to address this particular issue; it is being commissioned by Worcestershire County Council and local Clinical Commissioning Groups. The second will support to vulnerable young people in Birmingham. It will focus on 11-15 year-olds who are taken into residential care, or who are at risk of entering care.

The City of Edinburgh has issued an innovative tender seeking investor/developer partners to deliver affordable homes, mid-market and private homes, where it is considering providing Council owned land and a long term leasing commitment to enable the transaction. Under the model, the developer will design and build the homes, while the investor provides the finance and the Council acts as manager, operator and tenant source for the housing. The Council says it requires 36,000 new homes over the next 10 years of which 16,000 should be affordable homes.The €99m iShares Dow Jones Eurozone Sustainability Screened fund from BlackRock has returned 21.52% in the year to the end of May – versus a benchmark return of 21.36%. Over the three year-view, it has returned a cumulative 34.19%. The benchmark is the Dow Jones Sustainability Eurozone Index ex Alcohol, Tobacco, Gambling, Armaments & Firearms and Adult Entertainment.

The €43m Vontobel Clean Technology Fund built up a position in battery maker and auto supplier in May, according to its report for the month. “The company is benefitting from the increasing trend towards electrification in cars and thus demand for its AGM batteries, which are used in hybrid vehicles,” Vontobel said. The fund also increased its positions in solar-module manufacturer Canadian Solar, lighting company Osram and Chinese train manufacturer CSR, financed by reduced exposure to Cemig, the Brazilian utility.

AGF Management, the Canadian asset manager that looks after C$37bn (€25bn), has been criticised for merging two socially responsible funds with two conventional ones because the latter are heavily invested in tobacco firms. “It’s a slap in the face,” a Toronto-based independent financial advisor (IFA) told Advisor.ca, a portal for IFAs and other fund sellers. He added: “The one thing people know about socially responsible investing (SRI) is that we don’t own tobacco. It seems blatantly disrespectful to have chosen to roll the Social Values funds into funds with tobacco in their top 10 holdings.” In response, Gordon Forrester, AGF executive vice president, said a majority of the funds’ shareholders supported the merger despite the fact that the SRI component would be diluted. The fund merger took place late last November.