Responsible Funds, May 17: Ilmarinen, Franklin Templeton, GPIF, Triodos, Robeco

The latest responsible funds developments

Ilmarinen, the Finnish pension insurer, has provided seed capital worth around $2bn into three ESG exchange traded funds (ETFs) this year alone. Last week, the iShares ESG MSCI USA Leaders ETF (SUSL) was listed on Nasdaq with an initial investment of €750m ($837m) from Ilmarinen. In March, Ilmarinen invested more than €700m ($781m) in DWS’s Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) which was listed on the NYSE. Finally, Ilmarinen invested approximately €400m ($447m) in the Lyxor MSCI Europe ESG Leaders UCITS ETF (ESGE FP) which launched in February.

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund which has been focusing increasingly on ESG issues, has put out a request for information on multi-manager fund investment with a view to developing its own multi-manager funds in the future. A document on its website invites answers regarding how to create and run multi-manager schemes, benefits and drawbacks, and recommendations on the best scheme for GPIF.

The Church Pension Fund, the pension scheme of Finland’s Evangelical Lutheran Church, has tendered a €50m segregated ESG mandate for an existing European allocation with an emphasis on ESG analysis, engagement, proxy voting, and disclosure. Details of the portfolio’s current manager (if any) were not available.

Arbejdsmarkedets Tillægspension – the Danish labour market pension fund better known as ATP – has invested DKK1.65bn (€221m) in the newly established Foundation Copenhagen Infrastructure New Markets Fund, bringing the fund to a first close at $700m along with other cornerstone investors PensionDanmark, Kommunal Landspensjonskasse (KLP) and Lægernes Pension. Expected to achieve final close at $1bn within the next nine months, the fund will invest in renewable energy infrastructure, principally in Asia and Latin America. It will be managed by Copenhagen Infrastructure Partners.

Inspire Investing, a Christian faith investor has announced that its “biblically responsible fund” Inspire Corporate Bond Impact (NYSE: IBD) is the first ESG fixed income ETF to exceed the $100m mark. The fund was also a finalist in’s Thematic ETF of the Year awards.

Oregon Senator Jeff Merkley has introduced a bill which would give federal employees the option to invest retirement savings in fossil-free funds. The Retirement Investments for a Sustainable Economy (RISE) Act of 2019 proposes offering federal employees a Climate Choice investment option for the Thrift Savings Plan (TSP). While the TSP currently offers investors options for the amount and risk allocation of their TSP accounts, it does not offer federal employees any control over the types of industries in which their money is invested.

ORIX Corporation, the Japanese conglomerate which owns Robeco, has invested in Kamakura Investment’s Chiba Dojo Drone Fund II Investment Limited Partnership—Drone Fund 2, an investment fund specializing in investment in drone-related start-up enterprises. In addition to the capital investment, ORIX will deploy staff members to Kamakura Investment “with the aim of deepening its knowledge of drone-related businesses and securing business opportunities”.

The Oxford Endowment Fund has increased its minority equity stake in Osmosis Investment Management, a sustainable asset manager with $1.5bn in assets under management. As the stake is under 20%, the fund remains a minority shareholder.Franklin Templeton has launched the Franklin Green Target Income 2024 Fund, which will take a strong focus on engaging with investee companies on ESG issues, particularly on carbon dioxide emissions and water scarcity. The new fund – the third “buy and hold” fund of the Luxembourg-registered Franklin Templeton Opportunities Funds (FTOF) range – will initiate an asset gathering (IPO) period which will end after a period of up to six months. The fund management team will take a strong focus on engaging with investee companies on ESG issues, particularly on carbon dioxide emissions and water scarcity. Investors are expected to remain invested until the bonds mature in 2024. The Fund will be managed by London-based David Zahn, Head of European Fixed Income and Rod MacPhee, Vice President and Portfolio Manager from Franklin Templeton Fixed Income Group.

Helsinki-based asset manager FIM is to change the rules and investment policy of the FIM IG Green ESG Mutual Fund, as of 23 May. The amendment means that the fund may also invest in derivative contracts whose underlying asset is a credit risk, exchange rate or currency. The fund’s new rules can be viewed on the websites of FIM or S-Bank.

Triodos Investment Management has renamed the Triodos Sustainable Mixed Fund, its fund split evenly between equities and bonds, Triodos Impact Mixed Fund – Neutral. It has also added two variations: the Triodos Impact Mixed Fund – Defensive is split 25% equities and 75% bonds, a ratio reversed for the Triodos Impact Mixed Fund – Offensive. Also rebranded are: the Triodos Sustainable Equity Fund, which becomes the Triodos Global Equities Impact Fund; the Triodos Sustainable Bond Fund, which becomes the Triodos Euro Bond Impact Fund; and the Triodos Sustainable Pioneer Fund, which becomes the Triodos Pioneer Impact Fund.

The European Civil Protection and Humanitarian Aid Operations (ECHO), the EU’s humanitarian relief body, is tendering for a defined contribution pension scheme provider, with the stipulation that the successful applicant “must” provide at least one ESG option for its members. The EU body, which is looking for both administrative and investment services, has €42.7m in assets. The documents add that “abnormally low tenders” may be rejected if the tenderer “does not comply with applicable obligations in the fields of environment, social and labour law”.

PMT, the €77bn Dutch metalworkers’ pension scheme, has reportedly axed 40% of the countries in its emerging market debt index for being too similar to developed markets. Among the countries removed were Poland, Chile, Malaysia and Slovakia. The change comes after the fund co-develop a benchmark with its asset manager MN. The new index, which relies on a combination of ESG and financial data, is based on the MSCI World fixed income universe.

Robeco has been selected by PNO Media, the pension fund for the Dutch creative sector, to run its €250m Asia-Pacific equity portfolio. The active management mandate will see Robeco invest in equities in emerging and developed markets in the Asia-Pacific region, integrating ESG into the investment process. Link