As the trend for ESG investing increases UK merchant bank Close Brothers, asset management division, CBAM, is to launch two new sustainable funds to meet demand from its clients the bank announced today.
Closing in on sustainable returns
The new offerings will join the existing stable of funds in which CBAM manages more than £12.0 billion of assets.
The investment objectives of the new funds will be to generate consistent long-term returns by screening out unethical practices while focusing on investment opportunities with positive ESG and sustainability records.
What are the Close Brothers sustainable funds?
More specifically the Close Sustainable Balanced Portfolio Fund will look to provide capital growth and some income over medium-term investment horizon through a mix of bonds, ETFs, alternatives and third party funds but not it seems individual equities.
Whilst the Close Sustainable Bond Portfolio Fund, a rebranding of the Close Bond Income Portfolio Fund, will endeavour to generate income and maintain capital values by investing in bonds, third party funds and additional fixed income securities.
The managers of the funds are drawn from the CBAM hierarchy with Head of Funds Riitta Hujanen taking the led on the Balanced Portfolio. While Investment Director Andrew Metcalf will oversee the Sustainable Bond Portfolio.
How will the Close Brothers sustainable funds be managed?
Each of the funds will be actively managed and the firm has instigated what it calls a robust three-stage investment process, which, along with the firms sophisticated modelling techniques well be used to highlight opportunities which present attractive return profiles, as well as good ESG ratings and track records of sustainability.
Martin Andrew the CEO of CBAM said that
“Investors and clients are becoming more aware of how their money can affect the world around them and increasingly want to invest in ways that reflect their concern and respect for the natural environment, for human dignity and for responsible corporate behaviour. We are launching these new funds to meet this demand”
In something of a win-win for the investment management industry stocks and funds with strong ESG credentials have performed very well recently
For example, the First Trust Global Wind Energy ETF, which has a AAA ESG rating from MSCI has delivered a 12-month return of more than +40.0% according to ETF.com data. Whilst the AA-rated iShares U.S. Medical Devices ETF has returned +31.15% over the last 12 months.
As such this is unlikely to be the last sustainable fund launch in 2020 which is, of course, good news for retail investors, who typically benefit from increased choice and competition.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis