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Responsible Funds, Oct. 26: CalPERS-backed Quotient unveils Sustainable Beta product

The round-up of responsible funds news

New York-based boutique quantitative environmental, social and governance (ESG) boutique fund manager Quotient Investors has unveiled a new ‘Sustainable Beta’ product that aims to capture higher levels of positive ESG exposure while controlling risk to benchmarks, according to a client newsletter. Quotient was formed and funded by the California Public Employees’ Retirement System and Strategic Investment Group under the CalPERS Manager Development Program II in 2008. CalPERS has already allocated $100m to Quotient’s Sustainable Alpha ESG strategy. Home page

The £199m (€248m) First State Global Emerging Markets Sustainability Fund has returned 21.1% in the year to the end of September, against a benchmark return of 12.8% in the same period. Year-to-date performance at the fund, managed by David Gait / Millar Mathieson, is 17.5% (benchmark: 7.8%). The fund’s investment process takes account of sustainability themes and issues “and requires positive engagement with companies in respect of these”.

Impax Environmental Markets Plc, the London-listed clean technology investment vehicle managed by fund firm Impax Asset Management Group, says it has “disposed of all early stage unprofitable listed holdings”. It prefers energy efficiency as a theme and is keeping a “low weighting” in renewable energy.

Fund firm CCLA, which has £4.2bn under management, has announced a series of changes to the COIF Charities Ethical Investment Fund, following a consultation with clients. In future it will use a 10% turnover limit (down from 33%) for companies that derive turnover from alcohol, gambling, pornography, tobacco and strategic military sales. This limit will apply to the extraction of coal for energy use for the first time. The Burma screen will be relaxed and the fund has new minimum ESG standards. In addition, there will be an “aspirational” 2% target for high impact investments such as microfinance and immunization bonds.UK-based fund management firm Osmosis Investment Management has launched what it says is the first UCITS fund to directly address resource efficiency in a “measurable, objective and consistent manner”. The Osmosis MoRE World Resource Efficiency Fund is said to be a long only portfolio of the world’s most resource efficient large-cap global businesses; it has an allocation from Oxford University Endowment Management.

The first investment has been made by the Small Enterprise Impact Investing Fund (SEIIF), the joint initiative from Oxfam, the City of London Corporation and asset manager Symbiotics. It has made a $1m loan to Xac Leasing, a Mongolian machinery and equipment leasing company that is part of the Tenger Financial Group.

The new sustainable and responsible investment team at UK asset manager Alliance Trust Investments is considering new fund launches, according to Peter Michaelis, Head of SRI. Michaelis and his team recently arrived from Aviva Investors.

German pension funds and insurers raised allocations to sustainable funds significantly last year, even as the allocations of all German institutions relative to the fund volume decreased, a new study by the Sustainable Investment Forum (SIF) for Germany, Switzerland and Austria shows. It found allocations from German pension funds totalled 18.8% of the volume in 2011, up from 12.5% the previous year. The study put the volume, which includes retail funds and institutional mandates, at €21.6bn for 2011 and at €16.9bn for 2010. “Over the last year, we have noticed that pension funds and insurers are beginning to appreciate that a sustainable filter can lead to reduced risks and higher returns,” said Robert Haßler, deputy head of the SIF for the German-speaking lands.