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Responsible Funds, September 7: Northern Trust, Allianz, Danske Invest, DWS, RobecoSAM and more

The latest responsible funds developments

ABN Amro and Northern Trust Asset Management are revamping two of their funds by applying ESG filters to exclude firms with “very severe” controversial activities. The Northern Trust North America Equity Index UCITS FGR Fund (AUM €1.2bn) becomes the Northern Trust North America Custom ESG Index FGR Fund, and the Northern Trust Europe Equity Index UCITS FGR Fund (AUM €1.4bn) changes its name to the Northern Trust Europe Custom ESG Index FGR Fund. The funds are now benchmarked against MSCI North America Custom ESG Index and MSCI Europe Custom ESG Index.

Allianz Global Investors has launched a UCITS-compliant version of its Global Water fund, media reports have confirmed. Andreas Fruschki, manager of the existing US-only $600m fund, will also oversee its UCITS counterpart. The fund will focus on innovation, technology and infrastructure supporting global water supply solutions.

Danske Invest has launched the ESG-tilted Swedish small-cap fund Danske Invest SICAV Sverige Småbolag Class SA. Senior Portfolio Manager Peter Löfqvist and three supporting managers will identify firms with a market cap of less than 1% of the total Nasdaq OMX Sverige in an investment universe of roughly 350 stocks. The fund goes public in the middle of the Swedish general election campaign, a time when small-cap companies face a potential slump in business conditions.

Morgan Stanley has licensed the iSTOXX Europe ESG Climate Awareness Select 50 Index to issue structured products against. It’s a new index which selects 50 constituents based on climate data and sustainability research from CDP and Sustainalytics, alongside high dividend yield and low volatility characteristics. “The components are selected from a pool of companies that have considered the implications of climate change on their businesses, are implementing initiatives to further their use of renewable energy and are classed as leading companies with regard to ESG criteria,” said Stoxx.

Goodwell Investments, an impact investment house specialising in Africa and India, has launched a €20m fund focused on the inclusive economy in sub-Saharan Africa. Goodwell IV is aimed at private investors, family offices and foundations. Goodwell closed its previous fund earlier this year, and said it received “many investor requests” for a new version. The fund will explore opportunities around financial services, energy, healthcare and other basic services that are provided to the “unserved or underserved”.

Emerging and frontier markets specialist East Capital has launched a UCITS version of its ESG fund for China. Originally launched in 2014, the China A-shares strategy is benchmarked against the MSCI China A Index and excludes sin stocks, as well as screening out firms involved in controversies. It also uses proprietary ESG scores and voting and engagement tools. The Lead Manager on the fund is East Capital’s CIO, Peter Elam Hakansson.

The EIB is acting as anchor investor for a new sustainable Irish forestry fund, the SLM Silva Fund, making a €12.5m commitment via its Natural Capital Financing Facility. The fund – SLM Partners’ second – will acquire existing plantation forests in Ireland and make use of sustainable forest management, selectively harvesting individual trees instead of relying on clear-felling.

England’s Exeter University is looking to ramp up its integration of ESG with a £40m (€44m) “best in class” mandate. The university is looking to hire a single investment manager to manage its multi-asset portfolio following a “review” into how to better incorporate ESG into its investments. The document states that it expects the successful manager to deliver an investment return of “CPI+4 % p.a. over the long-term”.

RobecoSAM has reportedly launched an electric vehicle (EV)-focused fund, to capitalise on a market it anticipates expanding to $1.4trn (€1.2trn). The RobecoSAM Smart Mobility Strategy fund, managed by Thiemo Lang and his deputy Pieter Busscher, will focus on EV component suppliers, electrical grid and charging infrastructure, EV car manufacturers and sub-system suppliers and connectivity and autonomous driving. RobecoSAM has said by 2030 every third new vehicle sold will be electric.Avendus Capital Public Markets Alternate Strategies, the alternative asset management arm of KKR-controlled Avendus Capital, is launching an ESG fund in India. The fund, forecast to launch by the end of November, will target AUM of up to $1bn over the next three years. Sebi-registered research firm Institutional Investor Advisory Services (IiAS) will put in place “a robust ranking framework covering ESG principles”.

Ethical Partners Funds Management has reportedly launched an ethical Australian share fund to invest in 30 to 50 stocks on the S&P/ASX 300. Stocks for the Ethical Partners Australian Share Fund will be selected using its proprietary assessment, which excludes firms with poor environmental and human rights practices as well as those involved in industries such as gambling, weapons and predatory lending.

DWS, the €687bn re-branded Deutsche Asset Management, has launched. its first US “money market fund” to include ESG criteria. The DWS ESG Liquidity Fund will invest in US government bonds, money market instruments, and other debt obligations while also filtering for various ESG factors using DWS’ proprietary software, the ESG Engine.

Institutional investors have committed £500m to a new ESG strategy developed by London-based investment consultancy, Willis Towers Watson in partnership with US index provider, MSCI. The Adaptive Capped ESG Universal Index claims to offer investors a “simple and differentiated” way to invest in equities – in both developed and emerging markets – while taking account of a broad range of ESG factors, including excluding companies that fail to meet minimum ESG standards.

The National Homelessness Property Fund (NHPF), managed by UK social impact investment company Resonance and homelessness charity St Mungo’s, has received a further investment of £5.2m (€5.8m) from Oxford City Council, social partnership Project Snowball, and charitable trust Treebeard. It takes the fund, which has provided almost 700 UK homes to people who are homeless or vulnerable to homelessness, to more than £160m (€178m).

Vanguard Australia has selected a new values-aligned FTSE Russell index for two ESG investment products. It chose the FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index – the first FTSE Russell standard index family to incorporate several categories of ESG-related exclusions – for its new Vanguard Ethically Conscious International Shares Index Fund, and for its Vanguard Ethically Conscious International Shares Index Fund ETF.

Thomas Schumann Capital has launched a Water Risk Index, designed to inform asset owners and investment managers of the water risk to equities in their financial portfolios. The firm has said that, rather than forcing asset managers to interpret operational reports and resource management scenarios, the index “translates the key metrics of water risk into financial measures that can be accurately and effectively incorporated into financial models”.

The International Organisation of Pension Supervisors (IOPS) is developing draft guidelines on the application of ESG factors in the supervision of pension fund investment, IOPS president Carlos Ramírez Fuentes has confirmed. While the use of the guidelines will not be mandatory, Ramírez Fuentes writes that IOPS “believes they will encourage pension funds in IOPS countries to incorporate these factors in their decision-making process in some way”.

The EIB is considering backing a fixed-income fund from sustainability house ResponsAbility Investments. The fund will offer debt and mezzanine financing to companies that provide distributed solar in Africa and Asia. The amount the EIB is considering has not been disclosed.