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US foundations developing ESG emerging markets fund

A group of US charitable foundations are developing an environmental, social and governance-focused emerging markets equity fund with the aid of consulting firm Cambridge Associates.

A group of US charitable foundations are developing an environmental, social and governance-focused emerging markets equity fund with the aid of consulting firm Cambridge Associates. The objective is to overcome a ‘chicken-and-egg’ situation facing investors.
The institutions involved are Michigan’s $360m (€245m) Fetzer Institute, the $530m (€361m) Meyer Memorial Trust and an unnamed West Coast foundation. They will be looking for a manager to run the fund.
“There are currently no ESG-focused emerging markets commingled vehicles available to US institutional investors – largely because of a chicken-and-egg situation,” said Kevin Stephenson, director of Cambridge’s mission-related investing group.
“Managers with a platform to do this kind of fundperceive a lack of interest on the part of US-based institutional investors, but the reality is that institutions haven’t spoken up because they’ve yet to see a viable vehicle.
“We’re working with institutions to bridge this gap by corralling their interest. We will then help them conduct a search for a qualified manager willing to work with them on the specifics of an ESG-focused, emerging markets vehicle,” he added. Four global equity firms have already expressed interest in meeting this mandate.
The vehicle will incorporate socially responsible investing strategies such as positive screens, negative screens and corporate engagement.
The goal is to develop a fund large enough to be viable “out of the gate”. But it will welcome investments as small as $1m.