Fund Solutions

This Week’s Fund News: BlackRock Offers Active Climate Action Funds

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BlackRock, Cushon, Wellington, LOIM, Swiss Re, Alecta, PGIM, Nordea, Impax and Standard Life. 

BlackRock, the world’s largest asset manager, has launched two new active climate action funds. The BGF Climate Action Multi-Asset fund and BGF Climate Action Equity fund provide investors with access to major climate themes expected to enable or benefit from the transition to a more sustainable economy. The multi-asset fund is investing in issuers lowering their emissions across equities, fixed income and alternative assets, spanning themes such as clean power, sustainable nutrition, biodiversity and more. “Investors are increasingly looking to align their climate priorities with their investment goals – a balance that can prove highly complex and potentially create challenges on many levels,” said Rupert Harrison, Portfolio Manager for Multi-Asset Strategies at BlackRock. “In aiming to address this, a multi-asset approach can tap into a wide array of climate-related strategies to seek out the most attractive investment opportunities – and manage the risks – presented by climate change.” The equity fund aims to invest in companies providing solutions for the mitigation of and adaptation to climate change across multiple industries, such as clean transportation and sustainable food. “The fund targets greenhouse gas emissions at source by investing globally in the sectors that are mitigating the most significant causes of CO2 emissions – such as power generation, transportation fuels, agriculture and industrial processes and waste,” said Tom Holl, Portfolio Manager for Fundamental Equities at BlackRock. Both funds are classified as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR).

As part of its 2022 investment strategy for bonds, net zero pension Cushon Master Trust has partnered with Wellington Management and Lombard Odier Investment Managers (LOIM). The asset managers will be managing Cushon’s listed bonds, identifying qualifying companies that are credibly transitioning to net zero. Wellington will manage impact bonds with a climate and social focus, whereas LOIM will manage bonds focused on positive climate impact. “The expertise of two of the largest global players will be integral to delivering excellent retirement outcomes for our members whilst demonstrating our commitment to sustainable investing,” said Roger Mattingly, Chair of the Cushon Master Trust. The new strategy aims to reduce risk and enhance long-term returns by improving diversification across a portfolio of sustainable and responsible investments. As well as focusing on impact bonds, the strategy offers a 15% allocation to private markets managed by Schroders Capital, focusing on projects including clean tech, natural capital and sustainable infrastructure. “The environmental transition is the industry’s most pressing challenge, but also presents a significant investment opportunity,” said Nathalia Barazal, Co-Head of LOIM.

Swiss Re Insurance-Linked Investment Management (SRILIM), a fully owned subsidiary of Swiss Re, has partnered with Alecta, Sweden’s largest private pension fund, to secure a US$250 million investment for its 1863 fund platform. Through the fund format, Alecta will be able to participate in Swiss Re’s natural catastrophe business and gain exposure to Swiss Re’s underwriting arm. “Our primary focus is on generating attractive long-term returns for our customers,” said Tony Persson, Head of Fixed Income and Strategy at Alecta. “We are convinced that insurance-linked securities can generate high-quality and uncorrelated returns and are pleased to partner with Swiss Re to benefit from its extensive expertise in this domain.” Alecta manages occupational pension plans for 2.6 million people and 35,000 businesses across Sweden.

PGIM, the global investment management arm of Prudential Financial, has added a sixth strategy to its emerging market debt UCITS suite. The PGIM Emerging Market Hard Currency Debt ESG fund will build on the group’s existing Emerging Market Hard Currency Debt strategy with its integrated ESG framework and is classified as Article 8 under the EU’s SFDR. Managed by Cathy Hepworth and Mariusz Banasiak, the portfolio will be diversified across hard currency opportunities, including sovereign, quasi-sovereign and corporate bonds. “We remain optimistic on the prospects for hard currency sovereigns and corporates – which remain the most appealing segments within the EMD universe. However, we recognise differentiation is imperative as ever – particularly when faced with challenges such as increased debt burdens among sovereigns, and varying policy and fiscal consolidation efforts,” said Hepworth. Last month, PGIM also launched its Strategic Income ESG fund, a multi-sector bond strategy covering emerging market debt, commercial mortgage-backed securities and asset-backed securities with strong ESG credentials. “As the global post-pandemic recovery continues with unfamiliar obstacles, such as lingering inflation, our diversified Strategic Income ESG fund has the ability to capitalise on changing market opportunities, while still mitigating downside risks,” said Gregory Peters, PGIM’s Co-CIO.

Nordea Asset Management (NAM) has expanded its ESG STARS range with two new funds: US Corporate Stars Bond and North American High Yield Stars Bond. Originally launched as US credit funds in 2019, the funds have now been made available to international investors with an ESG best-in-class approach, applying NAM’s Paris-aligned fossil fuel policy. “The two US fixed income solutions complement our ESG STARS line-up in order to offer our clients a broad selection of ESG solutions that enable them to build diverse portfolios,” said Christophe Girondel, Global Head of Distribution at NAM.

Impax Asset Management has partnered with Bullfinch Asset, a clean energy financial technology provider, to invest in decentralised clean energy projects with a joint investment vehicle called Greenfinch. It will deploy capital in projects enabling locally generated energy and supporting the supporting the decarbonisation of the real estate sector. Solutions Greenfinch will invest in include solar panels, batteries and smart meters across residential, commercial and industrial sectors. Initially based in Germany, the strategy will gradually be expanded across Europe. “We believe decentralised energy generation is one of the most exciting growth areas in the renewables sector,” said Daniel von Preyss, Head of Private Equity and Infrastructure at Impax AM.

Standard Life, part of insurer Phoenix Group, has announced its plans to move US$15 billion of assets and 1.5 million pension customers to a sustainable default strategy by the end of this year. The new strategy will reflect Standard Life’s existing sustainable multi-asset strategies, enhancing long-term financial returns by ensuring ESG-related components are incorporated into up to 80% of each asset class. The firm will seek out responsible investment opportunities, ensure better stewardship and screen out operations that may counter growth prospects. “We are focused on taking a financial approach to sustainable investing, which means taking the right amount of investment risk at the right times for all our pension scheme members,” said Gareth Trainor, Standard Life’s Head of Investment Solutions.

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