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Responsible Funds, November 3: New Fundsmith sustainable fund excludes oil, metals & mining, aerospace etc.

The latest responsible funds news.

Fundsmith, the UK asset manager run by Terry Smith, the former CEO at Tullett Prebon and Collins Stewart, has launched its first sustainability fund targeting institutional investors. The fund’s launch came as Fundsmith signed up to Principles for Responsible Investment. The Fundsmith Sustainable Equity Fund, which developed from a segregated fund managed on behalf of UK charity, Comic Relief, excludes not just “sin stocks” like pornography and tobacco but also firms substantially involved in: aerospace and defence; alcohol; casinos; gas and electric utilities; metals and mining; oil, gas and consumable fuels. Its top three holdings are IDEXX, CR Bard and Paypal. Smith told RI that the new fund sets itself apart from other ESG funds in its focus on company performance, something he thinks is neglected in ESG funds. The fund will look to invest in between 20-30 companies.

Texas-based Sage Advisory has launched its first independently issued exchange traded fund. The Sage ESG Intermediate Credit ETF, which has been listed on the Cboe ETF Marketplace, replicates the Sage ESG Intermediate Credit Index. Laura Morrison, Senior Vice President, Global Head of Exchange-Traded Products at Cboe [Chicago Board Options Exchange] said: “Sage’s fixed income and equity ESG investment solutions are a testament to their commitment to sustainability and responsible investing. One of the Cboe’s guiding principles is good citizenship, and so it’s been a particular pleasure working with the Sage team to bring this product, which blends ESG issues with broad diversification and solid risk management, to market.”

Vert Asset Management, the Californian ESG manager founded by former Dimensional Fund Advisor executive Sam Adams, has launched what it says is the first sustainable real estate fund in the US. The Vert Global Sustainable Real Estate Fund, which is sub-advised by Dimensional, the Texas-based global asset management firm, is a global open-end mutual fund seeking to achieve long-term capital appreciation. The fund will invest in publicly listed real estate investment trusts (REITs) using evidence-based environmental, social, and governance (ESG) metrics.

Mirova, the responsible investment arm of Natixis Global Asset Management, has announced it has finalised a 51% equity investment in Althelia Ecosphere, the London-based impact investment manager. RI reported in June 2017 that takeover talks were underway between the two firms. The new entity, renamed Mirova-Althelia, aims to “become the European leader in investment in natural capital with a billion euros under management under 5 years”. The remaining capital will be held by Althelia’s founders, Sylvain Goupille and Christian Del Valle, with Mirova set to increase its stake in the company to 100% by 2022.

Africa50, the infrastructure fund for Africa, and Norfund, the Norwegian Investment Fund for Developing Countries, have partnered with Norwegian solar firm, Scatec Solar, to finance a 400 MWDC utility scale photovoltaic (PV) power plant in Egypt. Africa50 will take a 25% equity stake in the project, which reached its close on October 27. Senior debt for the project will be provided by EBRD, FMO, the Green Climate Fund, the Islamic Development Bank, and the Islamic Corporation for the Development of the Private Sector.

Norges Bank Investment Management (NBIM), manager of Norway’s giant oil fund, has disclosed a five-percent stake in US electrical car seat manufacturer, Lear Corporation, according to an US Securities Exchange Commission (SEC) filing.De Pury Pictet Turrettini & Cie, the Geneva-based private banking and funds house which is celebrating 10 years of “direct ESG engagement”, has just released the latest annual report for its Cadmos Engagement Funds. It says “We remain convinced that application of the UN Guiding Principles on Business and Human Rights, known as the ‘Ruggie Principles’, continues to represent the main challenge for large multinational companies.”

Cassa Depositi e Prestiti (CDP), the Italian State investment bank, has launched its Social Bond Framework, and has mandated HSBC and Societe Generale to organise a series of fixed income investor meetings in Europe next week – commencing on November 8. A senior unsecured inaugural Social Bond transaction with an expected intermediate tenor is then expected to follow, which will be issued off CDP’s €10bn Debt Issuance Programme.

The Green for Growth Fund, launched in 2009 by German development bank KfW and the European Investment Bank (EIB), has announced financing of $20m for two solar projects in Egypt, located in the Benban solar park in the Aswan province in southeast of the country. The projects, part of the International Finance Corporation-led Nubian Suns Solar PV Financing Programme, will be financed through an “IFC B loan”. Both projects are also to be supported by the Asian Infrastructure Investment Bank (AIIB) and the UK development finance institution, CDC Group.

The Shell Foundation, the oil major’s UK-registered charity, and FMO, the Dutch development bank, have signed a Memorandum of Understanding to join forces on increasing the flow of funds for impact finance in the energy sector – with a particular focus on Sub-Saharan Africa and India. The partnership will use tools such as capital solutions (debt and/or equity), grants, non-financial support, social investment, leadership- and joint evaluation, and advisory of funding opportunities.

A majority of impact investors provide capacity-building support (or technical assistance) to investees, yet capacity building in impact investing has not been adequately explored, according to the Global Impact Investing Network (GIIN) report Beyond Investment: The Power of Capacity-Building Support. GIIN research has found that 73% of impact investors provide this kind of assistance to their portfolio companies. Capacity-building practices used by impact investors often resemble forms of nonfinancial support historically leveraged by conventional investors to strengthen an investees’ strategy or operations. But also includes support to enhance and extend their impact.

Over three-quarters (78%) of private equity investors expect General Partners (GP) to increase their portfolios’ ESG focus over the next two years, according to research by Intertrust, the fund services provider. The study, based responses of 142 private equity investors, also found that biggest perceived obstacles to ESG integration are cost and resource constraints (51%).

AIM-listed specialist asset manager Gresham House is set to launch a new energy division, following the acquisition of Hazel Capital, the UK new energy infrastructure firm. Gresham House New Energy will launch with assets under management of over £100m, and will be led by Ben Guest, Bozkurt Aydinoglu, and Gareth Owen. The London-based manager paid £2.6m in the deal through a combination of cash and shares.