Last year was a bumper 12 months for sustainable fund launches, with 20 new funds investing in everything from renewable energy generation and storage, to clean transportation to emerging market debt: the sustainable investment universe has truly never looked so diverse.
Global asset manager M&G dipped its toe into impact investing with a new fund – the M&G Positive Impact fund – which invests according the UN’s 17 Sustainable development goals.
Focusing on six key areas mapped onto the SDGs, the investment team says it undertakes a ‘triple i’ approach to identifying impactful global investments, analysing the investment case, intentionality and impact of a company before investing in it.
Swiss private bank Union Bancaire Privee also launched an impact fund: the UBAM Positive Impact fund, which is domiciled in Luxembourg and priced in Euros; as well as an emerging market debt fund: the UBAM EM Sustainable High Grade Corporate Bond fund.
Choppy launch year
The latter is one of only two of 2018’s new funds to deliver a positive return since its launch, delivering 3.7 per cent over the six months to 7 January; although this is largely by virtue of being invested away from main developed markets – which took a hammering last year.
Investec also launched an impact offering, the Investec UK Sustainability fund. According to its factsheet, the fund focuses on UK based companies the manager considers are making a ‘positive contribution to society and/or the environment through sustainable and socially responsible practices and services.’
Montanaro Better World also has lofty ambitions, aiming to invest in ‘high quality companies’ making a positive impact on society and which emphasise sound environmental, social and governance (ESG) practices. Perhaps unsurprisingly, this means it doesn’t invest in companies with ‘material revenue exposure’ to arms, tobacco, gambling, pornography, alcohol, oil or coal.
The Ireland domiciled, euro priced fund got off to a shaky start, shedding nearly 10 per cent in its first six months. Again, however, this is almost entirely due to the slide in main markets and with €137.5 million already under management, the fund is clearly attracting revenues.
Sustainable fund launches of 2018
|Fund||1m % total return||Rank in sector||3m % total return||Rank in sector||6m % total return||Rank in sector|
|Castlefield B.E.S.T Sustainable Portfolio General||-0.2||128/308||-4.2||163/306||-6.4||248/303|
|Gresham House Energy Storage Investment Trust||0.0||8/9||n/a||n/a||n/a||n/a|
|Investec UK Sustainable Equity||n/a||n/a||n/a||n/a||n/a||n/a|
|iShares J.P. Morgan ESG $ EM Bond UCITS ETF||2.1||24/43||4.5||27 / 44||n/a||n/a|
|iShares MSCI EM IMI ESG Screened UCITS ETF||-0.3||72/103||n/a||n/a||n/a||n/a|
|iShares MSCI EMU ESG Screened UCITS ETF||0.3||82/113||n/a||n/a||n/a||n/a|
|iShares MSCI Europe ESG Screened UCITS ETF||0.6||84/114||n/a||n/a||n/a||n/a|
|iShares MSCI Japan ESG Screened UCITS ETF||-2.2||40/75||n/a||n/a||n/a||n/a|
|iShares MSCI USA ESG Screened UCITS ETF||-1.7||144/384||n/a||n/a||n/a||n/a|
|iShares MSCI World ESG Screened UCITS ETF||-1.2||15 / 28||n/a||n/a||n/a||n/a|
|L&G Future World Climate Change Equity Factors Index||-1.8||143/276||-3.9||60/273||-1.7||40/269|
|L&G Future World Sustainable Opportunities||0.0||68/282||-3.5||92 / 281||n/a||n/a|
|M&G Positive Impact||-1.8||141/276||n/a||n/a||n/a||n/a|
|Montanaro Better World||1.8||3/99||-4.2||32/93||-9.5||86/91|
|Multipartner SICAV RobecoSAM Smart Mobility||-1.5||40/48||-7.5||41/48||n/a||n/a|
|Rathbone Global Sustainability||-1.3||102 / 276||-3.9||61 / 273||n/a||n/a|
|SDCL Energy Efficiency Income Trust||n/a||n/a||n/a||n/a||n/a||n/a|
|Standard Life Investments UK Equity Impact Employment Opportunities||4.6||1 / 103||-5.9||80 / 102||-9.7||65 / 101|
|UBAM EM Sustainable High Grade Corporate Bond||1.1||412 / 488||3.7||259 / 478||3.7||194 / 449|
|UBAM Positive Impact Equity||2.0||65 / 674||-5.3||274 / 657||n/a||n/a|
All data sourced from FE Analytics, is before fund and platform/adviser fees and charges and is correct to 9 January 2019
Sustainable wealth manager Castlefield also launched a new addition to its BEST range – the Castlefield B.E.S.T Sustainable Portfolio – a UK-focused fund of funds that is available to both clients and non-clients through mainstream fund platforms.
Passive specialist iShares – a subsidiary of BlackRock – also launched a swathe of ESG ETFs into the market. The iShares Sustainable Core Suite is a range of six index trackers that exclude companies operating in sectors including tobacco, chemical weapons and oil and tar sands extraction.
Like all passive funds, however, these are unlikely to interest serious sustainable and impact investors. Despite a few exclusions, they still hold some of the most controversial corporations on the planet, including Exxon Mobil and Johnson and Johnson (currently facing nearly 12,000 law suits for its carcinogenic baby powder) in the world fund.
Strong active management comes from the Legal & General Future World Sustainable Opportunities Fund and Rathbone Global Sustainability, both of which rank among the top performers in their respective sectors since their launch and which are backed by highly experienced management teams.
Cutting edge tech
In the investment trust space – typically the home of some of the most innovative funds in renewable energy and infrastructure – Gresham House launched its Energy Storage fund, which invests in large-scale operational energy storage systems that utilise batteries and generators throughout the UK.
European sustainable specialist Robeco also launched a fund focussing exclusively on electric and autonomous vehicles. Managers say the Smart Mobility fund allows investors to ‘participate in the “electrification of transportation” megatrend’ which is says offers ‘outstanding’ long-term growth potential.
For more on these funds visit providers’ websites. If you want to invest, check availability through your online platform provider or speak with your financial adviser or wealth manager.