Responsible Funds, October 31: European retail SRI funds market surges – Vigeo/Morningstar

The latest responsible funds news

The European SRI retail fund market has grown to €127bn in assets under management (against €108bn last year), according to a new report from French ESG firm Vigeo and funds intelligence outfit Morningstar. There are now 957 funds in the market, up from 922 in 2013. The market share of SRI funds increased in all markets, recording “remarkable” increases in the Netherlands (17.8% of total AUM), Belgium (7.5%), France (4%), Switzerland (3.8%) and Germany (3.1%). These trends are extracted from the 14th edition of “Green, Social and Ethical Funds in Europe”. Of the funds, 17 have assets for more than €1bn and amongst the first 10, seven are French, one is in the UK, one is in the Netherlands and one in Spain.

The €125m LGT Sustainable Equity Fund Global has returned 13.78% in the year to the end of the third quarter, against a benchmark (MSCI World) return of 13.32%, according to its latest monthly report. The Liechtenstein-domiciled fund is an actively managed equity portfolio using sustainable criteria; the philosophy “considers the sustainable value creation and improvement to human well-being”. In September it returned -0.02%, versus a benchmark 1.44% return.

Hermes Investment Management, the asset manager owned by the £40bn (€51bn) BT pension scheme, has decided to shut down its commodities team. “We are an active manager, and we have found it increasingly challenging to deliver sustained, active returns in commodities. In addition, a growing number of our clients and prospects are viewing commodities as a tactical diversification play, best accessed passively,” Hermes said. Asked if it would involve layoffs, a spokeswoman declined comment, saying Hermes was still consulting with those affected. As of 2013, Hermes’ commodities team, led by Colin O’Shea, managed $1.4bn (€1.1bn) in assets from investors. Meanwhile, Hermes is launching a Multi Asset Inflation Fund. It’s the first product to be launched by the newly established Hermes Multi Asset team, led by Tommaso Mancuso.

The Turkish exchange Borsa İstanbul is launching a sustainability index. The BIST Sustainability Index will be unveiled at the Istanbul Chamber of Commerce on 4 November. The exchange has partnered with EIRIS, the UK-based ESG research house, to develop this index. Research for the index assessment has been completed by EIRIS and local research organisation, the Corporate Governance Forum at the University of Sabanci in Turkey.

The ABN AMRO Social Impact Fund, launched in March 2013 by the Dutch bank to directly invest in social and sustainable enterprises, has become a member of the Global Impact Investment Network (GIIN), the US-based industry body. Other new members include Ascension Investment Management, BNY Mellon, Standard Chartered Bank and Turner Impact Capital. There are now 152 members in 31 countries.US SRI firm Calvert Investments’ year-old Green Bond Fund benefitted from exposure to asset-backed securities backed by solar panels in the third quarter, according to its latest portfolio commentary. The $25.5m fund, launched in October 2013, returned 0.24% in the third quarter, against a benchmark (Barclays US Aggregate Bond Index) return of -3.50%. The fund is managed by Cathy Roy, Vishal Khanduja and Mauricio Agudelo.

The €466m RobecoSAM Sustainable European Equities fund returned 1.00% in September, according to a new factsheet, outperforming its MSCI Europe benchmark (return: 0.36%). Year to date, the fund has returned 7.13% (benchmark 7.00%). “Positive stock-picking was achieved with our investments in AnsaldoSTS, Total and Novartis,” wrote fund manager Kai Fachinger. The fund aims at companies with a focus on quality, innovation and sustainability that use competitive advantage to create shareholder value.

Sweden’s new centre-left government has pledged to contribute $500m (€394.5m) to the United Nations’ Green Climate Fund (GCF), which has been set up to finance projects in developing countries aimed at adapting and mitigating climate change. In announcing the pledge, newly elected Swedish Prime Minister Stefan Löven said his country was committed to “leading the fight against climate change.” The GCF aims to take in $100bn from developed countries by 2020, but so far only $2.3bn has materialised, the bulk of which has come from Germany and France. The GCF is based in Incheon, South Korea and is governed by a Board of 24 members supported by a Secretariat. Link

Deutsche Bank says it has secured an additional $12m financing from private sector investors for the Microfinance Enhancement Facility (MEF). This will enable MEF to grant up to 3,300 additional loans to micro and small enterprises worldwide. MEF was set up as initiative of the German Federal Ministry for Economic Cooperation and Development, KfW Development Bank and International Finance Cooperation. The privately managed fund is set up as a public-private partnership and has currently $591m in outstanding commitments.

Zürcher Kantonalbank (ZKB), Switzerland’s fourth largest bank and part owner of asset management firm Swisscanto, has confirmed that it is in talks to acquire all of Swisscanto. It said it would make no further comment for the time being – though Swisscanto expects a decision on its future in January. Ownership of Swisscanto is split between ZKB and 23 other cantonal banks in Switzerland. ZKB’s stake in the company, which is a provider of sustainable funds, is 18%. Founded in 1993, Swisscanto has CHF42bn (€34.8bn) in assets under management and employs more than 400 people. Beyond its eight offices in Switzerland, it is doing asset management business in London, Frankfurt and Luxembourg.