Fund Solutions

This Week’s Fund News: UK’s Brunel Backs Responsible Investing in Direct Lending

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BlackRock, SIM/Astarte, PIMCO and Neuberger Berger.

Brunel Pension Partnership has partnered with specialist research and advisory firm Aksia and launched the Brunel Private Debt Portfolio for Cycle 2 (2020-22), in order to bolster responsible investing in direct lending. A portfolio of private and corporate loans that’s diversified by sector and region can offer investors an attractive yield relative to the broadly syndicated market, Brunel said. The funds within the portfolio aim to target corporate direct lending strategies across Europe and North America. Brunel plans to make six to eight primary fund commitments to specialist direct lenders. So far, The Cycle 2 vehicle has made a primary commitment to a Europe-focused fund, and is expected to commit to US-focused manager in due course. “The attractions of this asset class for our clients are clear, but the challenges of implementation in this climate are clear, too. We needed a partner, not just a manager and, in Aksia, we have both. Their very experienced team, extensive market coverage, and industry-leading risk and performance analytics will stand us in good stead to deliver to our clients’ exacting standards,” said Richard Fanshawe, Head of Private Markets at Brunel.

BlackRock has launched a selection of ESG-focused funds which will target a 50% carbon intensity reduction. The asset manager launched two Paris-aligned climate change equity ETFs, the iShares S&P 500 Paris Aligned UCITS ETF (UPAB) and the iShares MSCI World Paris Aligned UCITS ETF (WPAB). Listed on the London Stock Exchange and categorised as Article 9 funds under SFDR, the ETFs track the S&P 500 Paris Aligned Climate Sustainability Screened index and MSCI World Climate Paris Aligned Benchmark Select index, respectively, which are both linked to the EU’s Paris Aligned Benchmark (PAB). BlackRock has also launched its Authorised Contractual Scheme (ACS) World ESG Insights Equity Fund, which will prioritise ESG materiality and overweight companies BlackRock believes may benefit over time from a focus on capturing ESG risks and opportunities. “With the significant reallocation of capital to companies with more sustainable practices already under way, pension schemes, insurers and wealth platforms are asking for our help to realise this historic investment opportunity,” said Sarah Melvin, Head of UK at BlackRock.

Smart Infrastructure Managers (SIM) and Astarte Capital Partners have established a joint venture which will invest more than US$1 billion in smart infrastructure opportunities across North America and Europe. SIM is combining its investment experience in smart infrastructure with Astarte’s existing ESG and asset management framework. The joint venture will initially focus on energy and transport sectors, but will also focus on waste, water and social infrastructures, optimising greener infrastructure by integrating ESG throughout the due diligence, investment and asset management processes. SIM and Astarte are committed to aligning with the UN SDGs. “Smart infrastructure is a growing area with vast potential, as well as an important driver of sustainability – with significant environmental, social, and governance benefits and best practices,” said Dr. Stavros Siokos, Co-Founder of Astarte.

PIMCO has launched the GIS ESG Income Fund which will target investments with strong ESG credentials. The fund is the latest addition to PIMCO’s GIS income suite offerings and will adopt the same global, multi-sector and flexible approach. “In a lower-for-longer investment environment, PIMCO is well-positioned as an active manager to find compelling opportunities in a rapidly evolving investment landscape that includes greater demand for strategies targeting sustainable investments. The addition of the PIMCO GIS ESG Income Fund brings PIMCO’s leadership in income investing to clients who want a unique, dedicated ESG strategy,” said Dan Ivascyn, PIMCO’s Executive Vice President.

Employee-owned investment manager Neuberger Berman held its final close for its NB Private Equity Impact Fund, with nearly US$280 million in commitments. The fund largely invests in assets exhibiting positive social and environmental outcomes, for example, by aligning with specific UN SDGs or broader investment themes such as addressing climate change or unemployment. The NB Private Equity Impact Fund will be deployed by a global team of over 60 investment professionals. “The Fund structure is designed to access best-in-class impact investments. The direct investments help increase overall capital efficiency and mitigate the J-curve. We seek to mitigate risk through diverse exposure to top-tier managers and companies. Additionally, we track and share the Fund’s impact metrics with our Limited Partners,” said Dominique Drenckhahn, Principal at Neuberger Berman.

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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