Fund Solutions

This Week’s Fund News: Invesco Turns up Heat with Solar-Specific ETF

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including Invesco, Brunel, HSBC AM, Schroders, Robeco and Vala Capital. 

In response to the growing popularity of renewable energy, Invesco has launched a solar ETF. The Invesco Solar Energy UCITS ETF will track the MAC Global Solar Energy Index, investing in leading global companies in solar energy technology, such as tracking systems, batteries, inverters and energy storage systems. The index, and therefore the ETF, will also invest in companies supplying raw materials, components or services to solar producers and developers. “The index methodology is fundamentally the same as when we created it in 2008. It is designed to track the performance of companies globally within the solar energy industry, with diversified exposure to all solar technologies, the entire value chain and related solar equipment. The biggest change has been in our universe. For example, solar tracking systems have been around for decades, but the companies are only now appearing in our index as the technology becomes more cost effective,” said Richard Asplund, Managing Director at MAC Solar Index. The launch of the ETF follows the earlier launch of the Invesco Global Clean Energy UCITS ETF, bringing Invesco’s UCITS ETF ESG-focused suite up to 15 funds (total US$3 billion in assets under management). “In following this index, our ETF will be investing in companies globally across the solar industry value chain but emphasising those with significant revenues from solar-related activities. Pure-play solar companies will be given increased weighting, while those earning less than a third of their total revenues from solar – or any from fossil fuels – will be removed completely. Constituent stocks must also meet strict liquidity, tradability and governance thresholds,” said Chris Mellor, Head of EMEA ETF Equity and Commodity Product Management at Invesco.

UK pension fund Brunel Pension Partnership has launched a £2.1 billion Sterling Corporate Bond, which will be managed by Royal London and incorporate ESG-related impacts into all investment decisions. Gaining exposure to sterling bond markets and the credit risk premium, eligible instruments include asset-backed securities, corporate bonds and sovereign bonds. “The fund is highly diversified, providing our clients with access to a range of holdings, as well as a range of maturities. Our clients’ prioritisation of ESG considerations was also reflected in the fund’s design and manager selection process. The manager is contractually committed to providing evidence of ESG impacts of decisions taken in the fund, and of any broader contributions the fund is making to investing responsibly,” said David Cox, Head of Listed Markets at Brunel.

HSBC Asset Management has launched the HSBC GIF Global Equity Sustainable Healthcare fund. As the firm’s first healthcare fund focused on sustainability and impact, the fund is aligned with the United Nations Sustainable Development Goal 3 (good health and wellbeing). It will target 35-40 companies that are working to improve healthcare affordability and will be available to HSBC’s wealth and institutional investor clients. “The current healthcare model is not sustainable and patient outcomes are being negatively impacted alongside the industry and investors. This fund aims to address this inequality and invest in companies that are offering different approaches through new treatment options, technology and innovative business models,” said Dr. Nathalie Flury and Dr. Michael Schröter, Co-Heads of Sustainable Healthcare Equity at HSBC AM.

Schroders has built out its UK sustainable equity suite with two new UCITS Trusts. The Schroder Sustainable UK Equity fund will invest in companies with sustainable business models and long-term growth prospects, capitalising on five key investment themes: the energy transition; sustainable industries; sustainable infrastructure; health and wellness; and sustainable consumer (goods and services). The Schroder Global Sustainable Value fund will invest in companies that the firm believes are undervalued versus the market and satisfy the fund’s ESG criteria. Companies will need to demonstrate that they have a positive social and environmental impact. These follow the launch of the two UK Unit Trusts for Schroders Global Sustainable Growth (GSG) and Global Energy Transition (GET) funds earlier this year. “We believe that the focus of these new strategies aligns with a growing desire among clients to allocate capital to managers that can clearly demonstrate investment in companies which adopt positive sustainability practices,” said Doug Abbott, Head of UK Intermediary at Schroders.

Robeco has partnered with Quintet Private Bank to launch the RobecoSAM US Green Bonds strategy. As a carve-out from RobecoSAM Global Green Bonds, which was launched last year, the strategy aims to provide diversified exposure to the US green bond market and outperform the Bloomberg Barclays MSCI USD Green Bond index. To ensure bonds are truly green, Robeco will perform a proprietary five-step green bond screening process. As exclusive partner for the first six months following launch, Quintet has initially committed €125 million to the strategy which will also be deployed in Quintet’s discretionary portfolios as part of the wealth manager’s own ‘sustainable by default’ strategy. “The RobecoSAM US Green Bonds strategy perfectly fits Robeco’s strategic ambitions in sustainable investing in general and our focus on climate-related risks in particular. We are excited to have Quintet as our launch partner and look forward to providing our other clients with an excellent opportunity to participate in the largest economy in the world opening up to greener investments,” said Christoph von Reiche, Global Head of Sales at Robeco.

Investment advisory business Vala Capital has invested in three sustainable startups for its new Sustainable Growth EIS. The firm aims to raise £15 million for the fund over the next two years, having raised £1.2 million for its first fundraising round. The second round will commence in September. The new portfolio includes Good Club, an online, low-waste and low-emission sustainable grocer, Homethings, a sustainable cleaning product company, and Qflow, a sustainable construction-tech business. All prospective investee companies are assessed according to three themes: technology for planetary health and mitigating climate change; consumption and commerce; and fairer access to social goods like health, education and water. “This is just the start of our long-term journey to identify fast-growth companies that aim to deliver attractive returns because of their sustainability credentials, not in spite of them. We believe that there are compelling macro tailwinds that will drive both financial returns and sustainability impact for businesses that can capitalise on them over the next five to 15 years,” said Jake Wombwell-Povey, Fund Manager at Vala Capital.

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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