A JP Morgan Asset Management sustainable emerging markets fund will have a strong focus on governance with two-thirds of its risk questionnaire focusing on this aspect within ESG.
The JPMorgan Funds – Emerging Markets Sustainable Equity Fund will combine exclusions and a best-in-class ESG approach.
London-based portfolio managers Amit Mehta (pictured) and John Citron will manage the fund. It will have a total expenses ratio of 1.05%.
In a press release, JPMAM head of EMEA Massimo Greco said: “Sustainable investing is critical in emerging markets – we believe it is entirely compatible with and, indeed, essential for a long-term investment approach that aims to deliver better results and allows the power of compounding to translate into investment outcomes.”
Rival sustainable EM funds to JPMAM
JPMAM touted the launch as one of the industry’s first sustainable EM equity funds.
Rivals in the space include Candriam – SRI Equity Emerging Markets, launched in 2008, Pictet – Emerging Markets Sustainable Equities, launched in 2012, and Vontobel – mtx Sustainable Emerging Markets Leaders, launched in 2017.
Somerset also launched a screened Global Emerging Markets fund in 2017 while Royal London offers the Emerging Markets ESG Leaders Equity Tracker.
IA Global Emerging Market funds with responsible investing focus
| 6m | 1yr | 3yr | 5yr | |
| Candriam SRI Equity Emerging Markets C Acc EUR in GB | 7.54 | 15.19 | -4.44 | 10.39 |
| Pictet Emerging Markets Sustainable Equities I EUR in GB | 5.40 | 9.36 | 23.25 | 32.88 |
| MI Somerset Global Emerging Markets Screened A Inc GBP TR in GB | 6.77 | 16.35 | ||
| Vontobel mtx Sustainable Emerging Markets Leaders N USD in GB | 6.79 | 16.35 | ||
| Royal London Emerging Markets ESG Leaders Equity Tracker Z Acc in GB | 4.66 | 13.89 | ||
| MSCI Emerging Markets TR in GB | 4.99 | 11.72 | 30.29 | 46.44 |
| IA Global Emerging Markets TR in GB | 5.63 | 13.57 | 26.82 | 42.54 |
Source: FE Fundinfo
Risk questionnaire focuses on governance
The fund will screen out weapons, tobacco production, fossil fuels, gambling, adult entertainment and UN Global Compact Violations.
Analysts will then require companies to complete a risk-profile checklist made up of 98 questions with a focus on governance, which will account for two-thirds of the questionnaire. Overall, three-quarters of the questionnaire is ESG focused.
SRI Services & Fund Ecomarket founder Julia Dreblow said governance can be a major concern in markets that are less mature and is a popular entry point for asset managers new to the responsible investing space. But Dreblow hoped JPMAM’s research into environmental and social issues would deepen over time stating these are the “cornerstones of sustainability agenda”.
JPMAM claimed its emerging markets team, led by Austin Forey, has been integrating environmental, social and governance (ESG) risk analysis and engaging with companies for more than 25 years.
