Fund Solutions

This Week’s Fund News: Lyxor Extends Green Bond Range with Corporate-focused ETF

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including Lyxor, Regnan, Schroders, BMO Global Asset Management and Big Society Capital.

Lyxor Asset Management has broadened its green bond ETF range with the Corporate Green Bond (DR) UCITS ETF. The ETF aims to allow investors to align their corporate bond portfolios with their net-zero ambitions. Listed on Euronext, Xetra, Borsa Italiana and the London Stock Exchange, the fund tracks the Solactive EUR USD IG Corporate Green Bond TR Index. “With the launch of this new corporate green bond ETF, Lyxor provides investors with a well-rounded green bond range – aggregate, government and corporate exposures – allowing them to pick and choose a green bond ETF best suited to their investment needs, and providing a simple way to take climate action and transition their bond portfolios towards a more sustainable economy,” said Philippe Baché, Head of Fixed Income ETF Product at Lyxor Asset Management. Lyxor launched the world’s first and now largest green bond ETF in 2017, and the world’s first ETF tracking sovereign Eurozone green bonds in July this year.

Regnan, the responsible investment management affiliate of JO Hambro Capital Management (JOHCM), has launched the Regnan Sustainable Water and Waste fund. The fund aims to generate capital growth over rolling five-year periods, investing in companies providing solutions to global water and/or waste-related challenges. The UK onshore OEIC is Regnan’s second investment strategy available to UK investors following the 2020 launch of its Global Equity Impact strategy. “This is an important step forward for Regnan and JOHCM. As our second Regnan offering and our first thematic fund, the Regnan Sustainable Water and Waste fund launch is reflective of how we as a company are evolving to meet our clients’ needs,” said Alexandra Altinger, JOHCM CEO for UK, Europe and Asia.

Schroders has strengthened its impact investment focus with the launch of the Emerging Markets Equity Impact fund. Aligned with the UN Sustainable Development Goals, the fund will have a primary focus on responsible consumption, sustainable infrastructure, health and wellness, and the environment. It will adopt a long-term, bottom-up investment approach, targeting 30-50 companies in emerging markets. “Companies in emerging markets are largely at the early stages in their impact and sustainability journey. As active and long-term owners, this provides an opportunity for investors to have an impact, further increasing the positive impact that the companies have,” said Co-fund Manager Jonathan Fletcher. This follows the June launch of the Schroder ISF BlueOrchard Emerging Markets Climate Bond fund.

BMO Global Asset Management has issued the prospectus for its Responsible Housing REIT (real estate investment trust), which intends to raise up to £250 million to invest into a diversified portfolio of supported housing accommodation across the UK. The trust aims to address a lack of available, quality accommodation catering for supported residents across a number of care sectors including adults and young people with learning disabilities, mental health issues, physical disabilities, addiction, those with support needs and those in need of temporary accommodation. According to BMO, the REIT offers a differentiated approach to supported housing provision through a leasing model based on shorter-term leases of around seven years to align with registered providers service level agreements. These lease structures should lower operation risk, supporting the generation of sustainable, reliable income over the longer term. Responsible Housing REIT announced its intention to float on the London Stock Exchange on 31 August.

UK-based social impact investing firm Big Society Capital has unveiled a new strategy aimed at doubling the UK social impact investing market by 2025. Noting the negative impact of the Covid-19 pandemic on existing social challenges, Big Society Capital said its new vision is targeted at increasing the size of the social impact investing market to £10-15 billion by 2025, compared to an estimated £5.1 billion as of end-2019. It will concentrate its efforts on investing in and attracting new capital across four priority investment areas: impact venture, social lending, social outcomes contracts; and social and affordable housing. The firm has played an active role in supporting the UK social and affordable housing market, which has grown to more than £2 billion in a decade. In the impact venture space, Big Society Capital has helped to fund 130 startups. Set up with £625 million from dormant bank accounts and four high street banks in 2012, Big Society Capital has committed £780 million alone – and £2 billion alongside partners – to supporting more than 1,500 social enterprises and charities. “Big Society Capital can play a part in driving the next stage forward – where we are confident that both social and financial impact will be able to scale even more quickly and effectively, in turn improving more lives,” said CEO Stephen Muers.

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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