ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including Invesco, Edentree, AXA IM, HSBC AM, Octopus, Brown Advisory, NEC, Tabula and Global Palladium Fund.
Invesco has rebadged its Invesco UK Companies fund as the Invesco Sustainable UK Companies fund. The actively management equity portfolio will now incorporate sustainability factors to positive screen companies across a wide range of industries without solely relying on exclusions. “In our view, the long-term investment opportunity in UK companies promoting sustainable themes is underestimated,” said Tim Marshall, the fund’s portfolio manager. “We believe that putting sustainability front-and-centre, above all stylistic factors such as value and growth, will create attractive long-term return potential for clients.” The fund will be supported by Invesco’s Global ESG team, using best-in-class data to identify investment opportunities. “As society transitions to a more sustainable future, our industry has an important role in both financing the transition and providing investors with access to the opportunities that arise from it,” said Alexander Miller, Head of UK Distribution at Invesco.
EdenTree Investment Management is expanding its sustainable funds offering with the Global Impact Bond (GIB) and Green Future Fund (GFF). The GIB will generate a positive societal impact by investing in a global set of impact-oriented fixed income instruments. Benchmarked against the iBoxx Global Green, Social, Sustainability index, it will be assessed at the issuer level for both ESG-labelled debt, including sustainable bonds, and non-labelled debt. “Addressing societal challenges is a truly global undertaking and we aim to play our part by seeking investments that contribute positively to the global economy wherever we can find them,” said David Katimbo-Mugwanya, Senior Fund Manager at EdenTree. “Our goal is to provide capital to companies that we believe are making a positive difference to the societies and environments in which they exist.” The GFF will provide investors with exposure to companies with strong growth prospects that are contributing positively to a green economy through innovative and sustainable business models. With a long-term investment approach, the portfolio will hold between 40 and 60 companies addressing seven key themes, including the circular economy, alternative energy and water management. “The major shifts we are experiencing across the global economy now present an exciting opportunity for investors to positively influence the world we live in tomorrow,” said Charlie Thomas, EdenTree’s CIO. “We believe that significant long-term investment opportunities are derived through allocating capital to the innovative companies that are addressing the world’s environmental challenge and this fund aims to identify those.”
AXA Investment Managers’ new Dynamic Green Bonds fund aims to generate revenue and growth over the long term, as well as financing the transition to a low carbon economy, by investing in green bonds aligned with the firm’s proprietary framework. The global strategy will be actively managed with a structural focus on higher yielding segments such as high yield credit and emerging market debt. It will adopt a concentrated approach aimed at yield enhancement and a flexible duration management to better navigate market cycles. “The fight against climate change has driven strong growth momentum in the global green bond market. As it continues to expand, we expect a significant rise in the proportion of high yield and emerging market issuers in this universe. This trend offers the potential to address investors’ hunt for yield while delivering measurable environmental impact,” said Fund Manager Johann Plé. Using AXA IM’s green bond framework, the fund’s environmental impact will be centred on four main pillars – green buildings, sustainable ecosystem, low carbon transport and smart energy solutions – to reduce energy consumption, produce clean energy and preserve ecosystems. The fund will support three UN Sustainable Development Goals: climate action (SDG 13), sustainable cities and communities (SDG 11), industry innovation and infrastructure (SDG 9).
HSBC Asset Management has launched the HSBC GIF Asia ESG Bond fund, which aims to provide long-term returns by investing in a portfolio of Asian bonds with strong ESG performance. Categorised as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR), it will invest in Asian companies demonstrating good ESG practices that are resulting in low and/or decreasing carbon intensity, alongside investing in green, transition, social and sustainability-linked bonds. The fund will implement negative screening to exclude weapons, thermal coal, gambling and tobacco. “Last year, we saw Asia issue a record amount of green, social and sustainability-linked US dollar bonds, demonstrating that growth in the space is strong,” said Alfred Mui, Head of Asia Fixed Income Investment Management at HSBC AM. “This opens up an opportunity for global investors to take part in Asia’s transformation through an ESG-enhanced Asian bond strategy, which also has a potential to offer higher yields versus other comparable markets.”
Octopus Investments, part of Octopus Group, has launched the Octopus Future Generations Venture Capital Trust (VCT) fund. It will target early-stage businesses disrupting industries and driving positive outcomes for the planet and society. These companies will be contributing to reducing carbon emissions, protecting ecosystems, improving access to digital learning or investing in modern healthcare industries. “The Octopus Future Generations VCT offers investors a fantastic opportunity to access a portfolio of exceptional, early-stage, purpose-driven companies which we believe have the potential to help to transform the world in which we live,” said Simon King, the fund’s portfolio manager. “We will look for companies that have innovative technology; a strong and passionate management team who know their field, a large global addressable market, and the ability to sustain a competitive advantage. We are seeing some really exciting investment opportunities.”
Privately-held US global investment management firm Brown Advisory is taking a global and sustainable approach to fixed income through its new Global Sustainable Total Return Bond strategy. Complementing the firm’s US sustainable fixed income platform, the new strategy seeks to provide strong risk-adjusted returns while generating a positive impact on global sustainability issues. It will invest in a broad range of liquid fixed income instruments, including securitised and corporate bonds, and conventional and inflation-linked bonds across developed and emerging markets, giving investors exposure to sustainable bonds beyond green or social labels. “The coupling of growing sustainability risks and low rates in developed markets that have been occurring for more than a decade poses an enormous challenge for private and institutional investors utilising bond allocations to generate income and to manage overall portfolio volatility,” said Ryan Myerberg, the strategy’s portfolio manager. “A global, sustainable and flexible approach to fixed income can offer investors access to a more attractive stream of income and risk-adjusted returns while simultaneously generating a positive impact on global sustainability.”
NextEnergy Capital (NEC) has announced the final close of its NextPower III ESG fund at US$896 million. The total capital pool for its investment strategy now exceeds US$905 million, receiving investments from pension funds, insurance companies, fund of funds and family offices. The fund aims to focus on the international solar infrastructure sector, targeting projects across OECD countries, including the US, Portugal, Spain and Poland. It has so far got an installed capacity of 742 megawatts (MW) spread across 23 projects. “The solar industry continues to show enormous potential and I’m looking forward to announcing further capital commitments for our private funds, notably NextPower UK ESG, in the coming months,” said Shane Swords, Head of Investor Relations at NEC.
Tabula Investment Management, a European ETF provider, has launched the Tabula EUR HY Bond Paris-Aligned Climate UCITS ETF in line with the EU criteria for a Paris-aligned Benchmark (PAB). Classified as Article 9 under SFDR, the ETF excludes nuclear power, gambling, alcohol and civilian firearms and is overweight on issuers with strong or improving ESG ratings. To ensure it meets EU standards, the ETF aims to deliver 50% less emissions when compared to the broader market benchmark and commit to a 7% annual reduction and automatic exclusion of fossil fuel companies. “The PAB rules set out strong climate standards, but many investors want to go a step further in terms of broader ESG integration,” said Jason Smith, CIO of Tabula. “This is particularly true in the high yield market, where the ESG risks may be greater and issuers are perhaps less able to mitigate them.”
Global Palladium Fund, a provider of physically-backed metal Exchange Traded Commodities (ETC), has announced its Global Palladium Fund Physical Electric Vehicle Metals ETC. It will provide investors with a cost-effective way to access metals needed in the transition to electric vehicles, tracking the performance of the Solactive GPF Electric Vehicle Index. “The growth in consumer appetite for electric vehicles in recent years has been phenomenal, and we are just at the start of this mega trend to replace the internal combustion engine. When approaching this theme, it can be hard for investors to know which equities to select, particularly when valuations are stretched and it is unclear which technologies or companies will be the winners. GPF is providing investors with an innovative physically-backed solution that offers a unique and diversified risk and return profile compared to traditional equity-based investments,” said Alexander Stoyanov, Global Palladium Fund CEO.