Three large asset managers have brought sustainable products to market, including two emerging markets equity and one fixed income strategy, as the deluge of ESG funds continues.
Aberdeen Standard Investments and JP Morgan Asset Management unveiled sustainable emerging market equity funds on Monday, while Morgan Stanley Investment Management has launched a UK sustainable fixed income strategy.
According to Morningstar data, the total number of funds in the European sustainable fund universe stands at 2,898 and 3,774 on a global basis, as of end of September. Overall, global assets in these strategies hit $1.25trn in Q3 this year.
ASI unveils EM equity fund aligned to UN SDGs
The Aberdeen Standard Emerging Markets Sustainable Development Equity fund is a Sicav investing in emerging market economies that have the strongest growth potential and where capital will have the greatest positive impact on society.
ASI’s global emerging markets team will pick companies for a 30-60 stock portfolio strongly aligned to the UN Sustainable Development Goals (SDGs). The fund aims to outperform the MSCI Emerging Markets Index (US dollar) and will have an annual management charge of 0.75% for institutional investors and 1.3% for retail investors.
In a press release announcing the launch, ASI said it believes that supporting the SDGs “creates tangible opportunities for companies to contribute positively to society and the environment, while simultaneously enhancing the long-term financial value of their businesses”.
It is the second fund in ASI’s Sustainable Development Equity range following the launch of the Asian Sustainable Development Equity fund in August.
ASI investment director Fiona Manning said: “The UN’s Sustainable Development Goals provide an excellent framework to ensure that efforts are directed to the areas of greatest need. While some progress has been made towards achieving these goals by 2030, people in many emerging market countries are still not benefiting from growth and progress and are increasingly vulnerable to economic, social and environmental risks.”
JPMAM brings its first sustainable Oeic to UK market
Similarly, JP Morgan Asset Management has unveiled the JPM Emerging Markets Equity Sustainable fund, its first sustainable Oeic and the first sustainable UK-domiciled active fund in the Investment Association’s Global Emerging Markets sector, the asset manager claimed.
It comes after the launch of a Sicav equivalent in November last year.
The strategy, which is run by portfolio managers Amit Mehta and John Citron, will exclude unsustainable sectors, including weapons, tobacco and gambling, and apply proprietary exclusions based on internal research. It targets companies considered ESG leaders and can demonstrate the economic sustainability of their business models.
The C-share class of the fund will have a total expense ratio of 90 basis points.
JP Morgan Asset Management head of UK funds Dale Erdei said: “We are delighted to be introducing our first sustainable Oeic offering to the UK market which builds on an established strategy. ESG sits at the heart of decision making for our emerging markets and Asia Pacific team, and has done for several decades.”
MSIM announces sustainable fixed income fund
Meanwhile, the Morgan Stanley UK Sustainable Fixed Income Opportunities fund will be managed by the firm’s global fixed income investment team. It uses a top-down selection process to pick ideas across the corporate and sovereign credit markets in developed and emerging markets that offer “absolute risk-adjusted returns while making a positive contribution towards a more sustainable and inclusive world”.
The team screens out controversial sectors such as weapons, tobacco, some fossil fuels and the portfolio is tilted towards the 80% strongest sustainability performers across sovereigns and corporates. It also has a focus on themes that contribute towards positive outcomes, with a particular focus on low carbon footprint.
It also aims to maintain a net positive alignment with the UN SDGs, while also investing in green, social and other labelled sustainable bonds.
MSIM UK Sustainable Fixed Income Opportunities fund portfolio manager Leon Grenyer said: “Our flexible approach to portfolio positioning allows us to adjust market exposure in line with the macroeconomic backdrop, as we seek to generate returns from a broad range of investment opportunities.
“We utilise an active asset allocation process across the global fixed income opportunity set, and, as we are not tied to a benchmark, our investment decisions are not restricted by geographic and sector weightings.”
