Responsible Funds, November 17: New high-yield ESG launches from Candriam and M&G

The latest responsible funds developments.

Candriam Investors Group, the €111bn European asset manager owned by New York Life Investment Management, has launched a new global high yield SRI fund. The SRI Bond Global High Yield offers investors access to high yield assets whilst “limiting the exposure to issuers with unsustainable growth models and low regard for the environment or social values”.

London based asset manager M&G has also launched an ESG global high yield fund, which will invest 80% of its assets in global high yield bonds. The fund, co-managed by James Tomlins and Stefan Isaacs, will integrate ESG using a three-stage screening process: 1) excludes companies in breach of United Nations Global Compact principles, 2) excludes companies that derive revenue from specific sectors, e.g. tobacco, alcohol, adult entertainment, gambling, thermal coal, defence, and weapons, and 3) filters companies according to their ESG credentials based on ratings provided by MSCI.

Railpen, the £27bn (€30.2bn) investment manager for the UK’s Railways Pension Scheme, is the lead investor in Kobalt Capital second “music copyright fund”, which has “a capacity of $600m through $345m of equity commitments plus debt”. Kobalt Capital, a subsidiary of music services firm Kobalt, is a regulated music royalty specialist investment advisor. The second fund comes off the back of a music royalties fund that launched in 2011 and spent over $350m on music copyright.

The NZ$35bn (€20bn) New Zealand Superannuation Fund and its partners have received “indicative commitments” of up to NZ$100m (€58m) for its proposed Māori Direct Investment Fund from over 35 Māori groups. The fund “will help the Māori groups further diversify their portfolios and access larger scale direct investment opportunities”. Formal fund closure is scheduled for late December.

The European Investment Bank (EIB) has signed a €180m finance agreement with industrial giant GE and Macquarie owned Green Investment Group to support the construction and operation of the largest onshore wind farm in Europe, with €100m of the financing coming from the European Fund for Strategic Investments (EFSI). The wind farm will be built near the Northern Swedish city of Piteå and will include 179 wind turbines. Green Investment Group Limited – formerly the UK Government’s Green Investment Bank – was sold to Macquarie in the Summer for £2.3bn.

The Joseph Rowntree Foundation, the UK based social policy research and development charity, has launched a new fund to invest in ventures which will “disrupt the energy, finance, and insurance markets and provide alternative services to people on low incomes”. Backed by the Joseph Rowntree Foundation, Big Society Capital, Nominet Trust, Ascension Ventures, and Finance Birmingham, the Fair By Design Fund aims to raise £20m.

Bill Gates has invested $50m in the Dementia Discovery Fund run by venture capital firm SV Health. The Dementia Discovery Fund, which launched in 2015, is backed by the UK government and several big pharmaceutical firms. It hopes to find a cure for the condition by 2025.The chair of the pension advisory panel of Southwark Council in London has outlined why the £1.2bn fund is divesting fossil fuels. Writing in the Guardian, Fiona Colley said: “In December 2016, Southwark council pension fund made a landmark commitment. Following more than a year of consultation, deliberation and work with community groups we announced a decision to divest the £1.2bn fund from fossil fuels.” It was a decision based “not just on our political and ethical concerns, but primarily on our belief that climate change and significant investments in fossil fuels present a long term financial risk to our fund”. She added that they were clear that it was “wholly consistent with our fiduciary duties as pension fund trustees”.

ESG-focused private equity firm The Builders Fund recently closed its inaugural $45m private equity fund and has announced it has acquired a significant stake in clean energy products company MPOWERD Inc. Tripp Baird, managing partner at The Builders Fund, said he was excited to work with the MPOWERD team and was “proud to support their important partnership with Save the Children to help light up Puerto Rico as part of the recovery effort”.

The €256m RobecoSAM Sustainable Healthy Living Fund has sold out of its position in US sports apparel company Skechers. In its latest report, the fund said: “The company delivered good Q3 numbers and shares surged 20%. We believe our investment case is now priced in and sold the position.” It added that the Healthy Living investment universe (about 45% consumer staples, 30% healthcare, 20% consumer discretionary and 5% materials exposure) underperformed the global equities markets in October and its “healthy nutrition” investment cluster contributed to the fund’s positive stock selection effect compared to the investable universe. “The Lifestyle Disease Solutions cluster was a detractor,” it said.

The EIB’s Board has also agreed €9.2bn of financing for 38 projects globally, with €3.7bn expected to be directed towards climate related investment. This includes schemes to adapt water infrastructure to changing weather patterns in the Netherlands and Panama, cut industrial energy use in Italy and Germany, increase use of small-scale hydropower in Greece, generate green energy from biomass in Poland and Croatia, reduce road use in Spain, and construct zero energy buildings in Austria.

UK local government pension scheme Berkshire Pension Fund has reportedly entered in to a “memorandum of understanding” with Local Pensions Partnership (LPP) to pool its assets with those already managed by LPP. The fund will now seek to get a proposal on the pooling approved before the UK Government set deadline of April 2018. LPP is one of the eight pension pools formed by at the behest of the UK Government.