Responsible Funds, May 19: Luxembourg Green Exchange expands into social bonds

The Luxembourg Green Exchange, which launched last year to list green bonds – and potentially other dedicated green products – is opening a new segment dedicated to sustainable and social projects bonds, as it seeks to broaden the spectrum of SRI instruments listed on the platform, Reuters reports. It is hoped that the new segment will increase the visibility and facilitate the financing of such projects.

US banking giant Morgan Stanley has reportedly raised $125m for its first global impact fund, PMF Integro Fund 1. The fund, managed by AIP Private Markets, part of Morgan Stanley Investment Management, will invest in private equity funds that positively affect the environment and society whilst delivering strong financial returns.

The National Employment Savings Trust (NEST), the UK workplace pension scheme, has awarded its first high-yield bond mandate to JP Morgan Asset Management. With an initial allocation of £40m, representing roughly 3% of NEST’s total portfolio, the new fund will be added to the NEST Retirement Date Funds. It is hoped that the mandate will provide decent returns in an otherwise low-yielding fixed income environment, NEST said.

Rabo Private Equity, the private equity arm of Dutch banking group Rabobank, has launched a new venture capital fund, Rabo Food & Agri Innovation Fund to invest in “high-potential, early-stage food and agri companies in Western Europe and in the United States”. Rabobank told RI that the fund would have sustainability considerations built into it, in line with the bank’s broader approach.

Moringa, the Edmond de Rothschild backed Africa-focused agroforestry impact investment fund, has announced it has finalised its second investment in Africa, putting $3m into Asante Capital EPZ, a Kenyan company developing tree plantations and tropical crops. The Moringa Fund is an investment company that provides equity financing for sustainable agroforestry projects in sub-Saharan Africa and Latin America.

LuxFLAG, the Luxembourg based ESG fund labelling organisation, has announced that the Japan ASEAN Women Empowerment Fund (JAWEF) has been awarded the LuxFLAG Microfinance Label for the first time. The microfinance fund focuses on empowering women in South East Asian frontier and emerging markets. LuxFlag has also published its latest LuxFLAG/ALFI/KMPG 2016 statistics on the European responsible investing fund market, showing a 30% growth rate in funds awarded Lux labels the last two years. This growth is attributed by the report to the momentum created by the 2015 Paris Agreement.Luxembourg based asset manager Cornhill Management Group has reportedly made its Shariah-compliant WSF Global Equity Fund available to UK investors for the first time, following the launch of a new sterling share class. The fund, managed by Malaysia-based boutique asset manager Cogent Asset Management, avoids companies that contravene Islamic law such as working with alcohol, tobacco, and gambling.

US insurance giant AIG has announced the launch of a new ESG fund – the AIG ESG Dividend Fund. The large-cap fund, which forms part of a suite of funds advised by SunAmerica, a sister company of AIG, includes up to 40 dividend-yielding stocks. The stocks will be chosen annually using the Russell 1000 Index, based on four metrics: dividend yield, profitability, valuation and ESG rating.

Passive investment heavyweight State Street has formed a partnership with TruValue Labs, which provides of artificial intelligence-driven ESG data. The pair will promote the adoption of ESG data produced according to the Sustainability Accounting Standards Board (SASB) framework. State Street will have access to TruValue’s the relevant data set as part of the agreement. They will also collaborate on research and development for new sustainability products. According to a report by State Street, benchmarking and a lack of industry standards for ESG are two of the biggest barriers to integration. This new partnership will enable State Street clients to use the SASB framework, it said.

The UK Conservative Party – the current ruling party in the country ahead of a general election next month – has pledged to create sovereign wealth funds if it is reelected, using funds generated by fracking. It is asking pension funds to join the initiative. The UK does not have any sovereign wealth funds yet, but the party said in its manifesto this week that it would “now make this a central part of our long-term plan for Britain”. It will create a series of ‘Future Britain’ Funds to back infrastructure and the national economy, it continued. “We anticipate early funds being created out of revenues from shale gas extraction, dormant assets, and the receipts of sale of some public assets”.

US impact investor DRI Fund has launched a new social impact fund ‘DRI Mortgage Opportunity Fund’ aimed at “providing innovative financing to communities that are underserved by mainstream banking”. The DRI Fund, founded in 2011, was recently certified by the US Department of Treasury as a Community Development Financial Institution.