Responsible Funds, Sept. 8: Sweden’s Alecta puts $100m into responsible emerging markets fund

Sweden’s €82bn pension giant Alecta has invested $100m in FMO’s new ‘responsible’ emerging markets fund. The NN-FMO Emerging Markets Loan Fund, a collaboration between Dutch development bank FMO and Amsterdam-based asset manager NN Investment Partners, offers institutional investors the opportunity to invest responsibly and with “impact” in emerging markets. A first close is expected in the fourth quarter, 2017 and the fund is reportedly still in discussions with other investors.

Korea Investment Corporation (KIC) is ramping up its responsible investment stance with a planned $300m investment in ESG funds and adoption of the country’s stewardship code. Whilst the South Korean sovereign wealth fund did not specify the time-frame and details of its ESG fund plan to RI, it did report that it will be selecting “a global manager specializing in ESG funds” as a result of the move. RI was also told that the “gradual” allocation of capital to the planned ESG funds would be based upon the continued “consideration of global ESG trends, market environment, and investment performance”.

A new environmental mutual fund has been launched by Boston-based Essex Investment Management Company. The Essex Environmental Opportunities Fund will be run by co-portfolio managers, Bill Page and Rob Uek. It is based on the firm’s long-standing institutional investment effort in public equities centered on environmental solutions, the Essex Global Environmental Opportunities Strategy (GEOS). The fund will be offered in two share classes, institutional (ticker GEOSX) and retail shares (EEOFX). Essex’s distribution and mutual fund services partner for the Fund is Ultimus Fund Solutions.

Real Impact Tracker, the new initiative by sustainable investing stalwart Cary Krosinsky, has launched a sustainability based ranking of US mutual funds and ETFs. The Real Impact Fund Rating, which scores the relative environmental and social impact of 60+ US public equity funds on an A-F scale, has found that funds managed by US SRI firms top the list – with Pax Global Environmental Markets and Walden Equity tied for first. Funds are ranked by the initiative on ESG strategy (depth and performance), shareholder engagement, public sphere advocacy, and performance. Krosinsky told RI that the ratings, a first for the US, fill a “gap” in the market and go beyond marketing to truly evaluate which funds generate real impact on top of financial performance.

The Calvert Social Investment Foundation has closed a $5m investment in the eco.business Fund, which supports sustainable business practices in Latin America. The fund offers loans to qualified financial institutions that on-lend fund money to businesses using environmentally sustainable practices in the sectors of agriculture, forestry, fishing, and ecotourism. Calvert Foundation’s investment, a purchase of subordinated notes, is said to demonstrate the fund’s capacity to attract an increasing number of private investors by offering multiple investment instruments.The pension fund for the Evangelical Lutheran Church of Finland has published a ‘prior information notice’ for an upcoming €80-90m ESG tender on the EU’s online tendering site. The Church Pension Fund plans – sometime in November– to tender for portfolio management services related its shares in Finnish companies. In the pre-notice document for the planned ESG mandate the description for the service being requested emphasises that the “asset management agreement pays special attention to responsible investment and corporate governance”.

The People’s Trust has published its prospectus and launched an offer for subscription, an intermediaries’ offer and a placing of shares with a target of raising £125m by October 10. The trust is the brainchild of former Investment Association head Daniel Godfrey in the UK and has been designed to be able to “resist the short-term pressures within the financial services industry” to focus on “sustainable wealth creation through high-conviction, high-stewardship, low-turnover investment, rather than short term relative returns”.

Norway-based fund firm Skagen says it has been in “close dialogue” with coal firm CMS Energy, which is on the Norwegian Pension Fund Global’s watch list. In its latest ESG update, Skagen said: “The lead portfolio manager of the fund has been in close dialogue with CMS Energy about the direction of the company, their use of coal in electricity production and the growth of alternative energy sources.” During the year so far it has engaged with six companies on various issues of differing magnitude, ranging from Dutch paint producer Akzo Nobel to commodities trading house Glencore.

The UN’s Green Climate Fund has launched a new ‘gender guide to climate finance’. The Mainstreaming Gender in Green Climate Fund Projects offers guidance on how to include women, girls, men, and boys from socially excluded and vulnerable communities in all aspects of climate finance. Last month it was also reported – in relation to the fund – that the Malawian Government’s efforts to access support for climate financing had been hampered by legal disputes between the World Bank and Green Climate Fund.

Quant ESG firm Arabesque has announced the August performance of its Prime and Systematic funds. The former returned -0.15% while the latter returned +1.10% — while the benchmark, the MSCI All Country World Index (ACWI), returned +0.38%. “Companies from the Technology sector contributed the most to both funds’ performance,” the firm said. “Relative performance was positively impacted by sector allocation decisions for both funds. Stock selection had a positive relative impact for Systematic primarily driven from Technology and Consumer Cyclical stocks.”