Fund Solutions

This Week’s Fund News: Franklin Templeton Launches Impact Bond Fund

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including Franklin Templeton, RLAM, LifePath UK, DWS, Jenson and BNPP AM. 

US-based asset manager Franklin Templeton has launched the Brandywine Global Multi-Sector Impact Fund, a new impact bond fund for European investors sub-advised by Brandywine Global. Building on Brandywine Global’s existing multi-sector investment framework, the fund will be targeting investments helping the transition to a sustainable and equitable economy, engaging with fixed income issuers that have potential to materially improve their environmental and social practices. Labelled as Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), the fund is currently registered for distribution across the UK, Ireland, Germany and Italy, and it will be registered in Switzerland in the coming weeks. Jaspal Sagger, Franklin Templeton’s Head of Global Product Strategy, said: “Many of our clients have conveyed an interest in funding the transition to a more sustainable world, so we are delighted to bring to market a new fund that has been explicitly designed to deliver measurable impact through engaging with companies on their sustainability journey.” 

Royal London Asset Management (RLAM) has added to its sustainable investment fund range with the Sustainable Short Duration Corporate Bond Fund, which will employ bottom-up research to provide investors with access to a diverse set of sustainably minded borrowers across a variety of economic sectors. The fund assesses the ESG profile of bonds whose expected duration is around 2.5 to three years and targeting a number of socially impactful sectors that are often inaccessible for public equity investors, such as charities, government agencies or privately-owned businesses. Shalin Shah, the fund’s Senior Portfolio Manager, said: “We believe our approach, focusing on high-quality, short duration assets, offers an attractive solution for investors seeking new sources of yield within a robust portfolio able to minimise exposure to downside risks.” 

BlackRock’s £9.2 billion defined contribution (DC) investment strategy LifePath UK now has a formal ESG policy, which incorporates a climate objective and other sustainable-related objectives into its fund prospectus. The ESG policy also includes a commitment to half carbon emissions intensity by sales over a ten-year period (from July 2019), as well as lowering portfolio carbon emissions intensity by sales relative to a composite non-ESG benchmark. BlackRock will be investing a minimum of 80% of assets held in corporate issuers in ESG screened / optimised strategies, as well as a minimum of 80% of assets held in sovereign issuers in strategies with an ESG sovereign rating of BB or higher. Sarah Melvin, BlackRock’s Head of UK, said: “The formal adoption of an ESG policy in our LifePath UK strategy reflects BlackRock’s commitment to listening to our clients and providing sustainable solutions that meet their expectations. The update further enhances LifePath as a leading default strategy for the UK DC market, and we are excited to strengthen BlackRock’s efforts to help our clients navigate the transition.” 

German asset manager DWS has restated its commitment to ESG, in the aftermath of greenwashing claims and investigations. DWS plans to expand its ESG offering across equities with a new strategy looking to boost shareholder value and capitalise on the company’s full potential, as well as continuing to build additional partnerships, deploying passive Xtrackers and leveraging its alternatives capabilities to participate in the European low-carbon transformation. Further, DWS is targeting incremental investments of €70 million into growth areas over the next three years, which will be self-funded through the re-allocation of resources. Stefan Hoops, DWS’ CEO, said: “We remain fully committed to ESG. It is a top priority for our clients and we owe it to society to stick to our commitments. Our main focus is on climate change, engaging with companies and countries, and, with our European Transformation Funds family, helping to provide finance for the much-needed green transition of the European economy.” 

London-based venture capital firm Jenson Funding Partners has launched a new £60 million ‘pre-seed-to-Series-A’ fund, the Aurora I. The fund is targeting companies helping businesses and consumers reduce their impact on the environment cost-effectively with solutions that can be integrated with everyday life. The B-Corp certified firm has launched the fund with venture partners from Cambridge University and looks to bridge a funding gap for UK climate tech between seed stage and Series A. It will be deployed over three years, with 60 pre-seed and seed stage companies in the first year, 20 follow-ons in the second year, and then a final ten investments made in the most successful firms. Sarah Barber, Jenson’s CEO, said: “Aurora I is the opportunity for us to leverage our track record of successfully backing early-stage businesses with the potential to directly impact the way we live and work – and extend what we have already done in discovering some exciting start-ups with strong sustainability credentials.” 

BNP Paribas Asset Management (BNPP AM) has acquired a majority stake in Copenhagen-based natural resources specialist International Woodland Company (IWC). The acquisition is part of BNPP AM’s sustainable investment offering expansion, as well as the broadening of its private markets’ investment platform, which enables investors to increase allocations to sustainable private investment strategies. The transaction is expected to close in H1 2023 and is subject to regulatory approval by the Danish Financial Supervisory Authority. IWC – which oversees €5.5 billion of timberland investment programmes globally – has over 30 years’ experience in providing investment management and advisory services within sustainable timberland investments, agriculture investments and ecosystems services, including carbon credits and conservation projects. Otto Reventlow, IWC’s CEO, said: “We believe that wood is the preferred material in a carbon-neutral world, and agricultural production is on an important path to deliver sustainable proteins to the global citizen. This partnership will enable IWC to expand its distribution reach and further its resources on sustainability and the EU taxonomy to the benefit of both our current and future clients.” 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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