Responsible Funds, Feb. 8: Amundi’s KBI Global Investors launches fossil free versions of three equity funds

The latest responsible funds developments

KBI Global Investors (KBIGI), the Dublin-based global equity and natural resource specialist that is majority owned by Amundi, has launched fossil free versions of its Global, Eurozone and Emerging Markets equity funds. The trio of funds – called the “Integris” fund range – integrate ESG scores for all stocks in the investment portfolio and “will always deliver a portfolio with an ESG score above the index”. They also avoid certain controversial industries and adhere to the US Conference of Catholic Bishops guidelines on investing.

DNCA Finance, a Natixis affiliate, has launched three new SRI– and ESG-compliant strategies for its recently formed Beyond unit. The DNCA Invest Beyond Alterosa fund, an SRI-focused wealth preservation fund, will invest in corporate bonds and up to 50% equities; the Semperosa fund, an environmental and social impact fund, will seek to meet the UN SDGs through listed equity investments with an added emphasis on transparency; and the DNCA Invest Beyond European Bond Opportunities will focus on the fixed income market, moving between bonds and money market products.

Nordea Asset Management has launched the Nordea 1 – Emerging Stars Bond Fund, the second ESG fixed income solution for its Stars range. It follows the recent launch of the Nordea 1 – European *Corporate Stars Bond Fund.

The $1 billion ESG fund of India’s KKR-owned Aventus Capital, launched in August 2018, has made its first investment in a company. Abhay Laijawala joined from DWS to be the lead fund manager.

NEST, the UK workplace scheme, is seeking a fund manager with “high quality repeatable investment process, a robust risk management framework and who considers ESG factors” for an actively managed global investment grade corporate bond fund. This new mandate will be added to the existing range of ‘building blocks’ funds that make up the scheme’s NEST Retirement Date Funds and some alternative fund choices.

The UK’s Department of Digital, Culture, Media and Sport (DCMS) has agreed to back a fund of up to £30m of equity investment in social tech ventures. The Social Tech Venture Fund will be run by the Social Tech Trust, a UK investor and a registered charity that provides grant funding and support to “organisations that transform lives through technology”.

Norwegian pension fund KLP was among a pool of institutional investors to make initial commitments to NextPower III (NPIII), bringing the solar energy fund to first close at $160m NP III is expected to build a diversified portfolio that, when fully invested, will comprise an estimated 50 to 150 individual solar PV plants.

HSBC has selected the FTSE UK 100 ESG Select Index as the underlying benchmark for a series of new ESG-related structured products. The index will measure the performance of the top 100 companies demonstrating strong ESG practices within the FTSE All-Share Index.

BlackRock Real Assets has sold five wind farms and one solar project to Equitix Investment Management for an undisclosed sum. The portfolio, which BlackRock brought through construction and early stage development, achieved commercial operations between 2010 and 2015. BlackRock said the portfolio has “a proven track record of consistent operational performance”.Carmignac has received French government SRI labels for three of its funds from independent accreditation body AFNOR. The three funds – equity funds Carmignac Emergents and Carmignac Portfolio Grande Europe and multi-asset emerging market fund Carmignac Portfolio Emerging Patrimoine – “adopt a flexible, non-benchmarked approach and incorporate ESG analysis and scoring in their investment process” and seek “a low carbon emissions objective and include a positive impact”.

Proof that sustainable funds can outperform the broader market is mounting, according to Barron’s annual survey of mutual funds in the Morningstar database. In 2018, 39% of the sustainable, large-company funds on the Barron’s list outpaced the large-cap S&P 500, versus 36% of all actively managed funds. Meanwhile, flows into ESG funds have reached record levels, with $5.5bn in net inflows, while the US fund universe saw its lowest calendar year flows since 2008

Earth Capital has exited the UK Energy Efficiency Investments Fund through a £100m IPO. Earth Capital was invested in the fund through its Nobel Sustainability Fund alongside the Green Investment Bank, Earth Capital investee SDCL EEco (SDCL), the European Investment Bank and other institutional LPs. In December 2018, the SDCL Energy Efficiency Income Trust acquired the assets of the Fund in conjunction with its £100m IPO.

Candriam has reportedly launched a thematic “cancer-focused” equity fund to invest in products and services being used to diagnose and treat the disease. Launched on World Cancer Day, the Candriam Equities L Oncology Impact fund will target companies linked to immunotherapy, nanotechnology, robotic surgery, and other areas of diagnostic and treatment. 10% of fees will be donated to support cancer research within European cancer research institutes.

Swiss energy, food, and water (EFW) efficiency firm EFW Swiss AG has announced its EFW Efficiency Fund – which tracks the company’s bespoke EFWEfficiency Index – is up 8.78% this year. In January the Fund outperformed the MSCI World by 1.10% and the Dow Jones Sustainability Developed World Index by 2.54%. The EFW Efficiency Index is built around the thesis that financial performance is correlated to a company’s energy, food and water efficiency.

Solactive has worked with major data and analytics provider ISS ESG to release a new line of ESG indices. The Solactive ISS ESG Screened Index Series reviews all companies in the Solactive Global Benchmark Series, the base universe for the index, and aims to track various size and regional segments of the global capital markets, only including companies with low involvement in controversial areas. For bonds, the Solactive ISS ESG Screened Euro IG Corporate Bond TR Index tracks the EUR denominated corporate bond market, applying the same ESG criteria.

In January 2019, the Arabesque Systematic returned +2.87%, whilst the benchmark, the MSCI ACWI, returned +7.90%, according to quant sustainability firm Arabesque Asset Management.