August 30, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 2
Event: New ESG focused fund in Indi for later this year announced for Avendus.
Briefing Points: i) Avendus Capital Public Markets Alternative Strategies, which is the alternatives’ asset management division of Avendus Capital, is expected to open a new ESG focused fund in India by late November of this year, ii) The ESG fund, which is the firm’s first, will be a focused portfolio of companies having long-term records of positive ESG practices, and be targeted to institutional investors, and iii) The portfolio manager is Abhay Laijawala, who previously was with Deutsche Securities. He will partner with Institutional Investor Advisory Services (India) that will provide ESG factor ratings to be developed for the fund’s selections.
Affected Fund(s): TBD
Asset Classes: Equities
Management Company: Avendus Capital, Inc. (Mumbai and New York, NY)
Marketing Considerations: The new ESGF fund represents “uncharted waters” for the firm and possibly also for any investors not familiar with the management company. Its offering, however, does signal the expanding global interest in ESG investing with the likelihood of growing market acceptance. This launch may be timely in that corporates in India have increased their focus on governance practices.
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August 27, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 3
Event: Founders Financial introduces sustainable strategy to its platform.
Briefing Points: i) Founders Financial is now offering a “dedicated series” of sustainable investment strategies “embracing SI strategies” using 2nd-party managers such as Calvert, PAX, DFA, and TIAA, ii) The strategies will be populated by managers screened using quantitative and qualitative factors, with an added overlay that evaluates their contributions to the strategies risk and diversity, and iii) The 5 new strategies include the range of risk profiles from conservative to aggressive growth, and will be available through Founders’ RIA and B/Ds.
Affected Fund(s): Freedom Capital Management Strategies
Asset Classes: All
Management Company: Founders Financial Securities (Towson, MD)
DD Concern: New untested mandate and/or management team
Marketing Considerations: The series is clearly a competitive move which will help retain the firm’s sales force. It also has the added advantage of building off its 2nd-party managers’ already established positioning in the sustainable funds market.
August 27, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE Alert: 2
Event: Women’s empowerment ETF opened by Impact Shares.
Briefing Points: i) The new ETF is offered through a partnership of Impact Shares and the national YMCA, ii) The ETF invests in mid- and large-cap stocks of companies which are assessed based upon “social criteria” established and reviewed by the YMCA USA, and iii) The ETF is benchmarked against the Morningstar Women’s Empowerment Index.
Affected Fund(s): Impact Shares YMCA Women’s Empowerment ETF
Asset Classes: US Equities
Management Company: Impact Shares Corp. (Frisco, TX)
DD Concern: Consistency of investment analytics/research
Marketing Considerations: As with the firm’s previous offering (the NAACP Minority Empowerment ETF), the ETF’s position as the first entry into the market and its “affinity group” ties has its promotional advantages. However, its untested mandate and company selection process that incorporates technical input from its non-profit partner, must be closely monitored.
August 22, 2018
DUE DILIGENCE Alert: LOW
COMPETITIVE Alert: 2
Event: Latest clean energy infrastructure private equity fund closes.
Briefing Points: i) The latest in a series of Capital Dynamics private equity funds has been closed to new investors, ii) The fund, the Clean Energy and Infrastructure VII JV LLC with capital commitments of $1.2 billion, specializes in making direct investments in renewable energy generation projects and clean air technologies, and iii) The fund was only available to institutional investors and public funds.
Affected Fund(s): The Clean Energy and Infrastructure VII JV LLC
Asset Classes: US Equities
Management Company: Capital Dynamics
DD Concern: Successful deployment of available funds
Marketing Considerations: The fund is geared to institutional investors. APG, California State Teachers’ Retirement System (CalSTRS) and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) are the primary equity participants in this fund as well as a previous fund organized by Capital Dynamics. It illustrates a continuing interest in ESG investing in general and alternative energy investments in particular.
August 21, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 2
Event: Allianz Global expected to introduce its green bond fund in US.
Briefing Points: i) Allianz Global is expected to transfer a version of its existing European-based green bond fund to the US, ii) The fund will invest in green bonds issued by investment-grade corporations, governments, sovereign entities and agencies, and iii) Allianz Globals’ non-US green bond fund was registered in Luxembourg in 2015 and is offered to retail and institutional investors.
Affected Fund(s): Allianz GI Green Bond Fund
Asset Classes: US and Non-US Fixed Income
Management Company: Allianz Asset Management AG (New York, NY)
DD Concern: Competitive strategic move/repositioning
Marketing Considerations: The firm’s domestic fixed income management has been largely the purview of its subsidiary, PIMCO. The US clone is expected to be a tougher sell to domestic investors in general, where by the end of the year there may be as many as five green bond funds (see also BlackRock, below) that to-date across two existing mutual funds and one ETF have only attracted $182.5 million. Further, the integration of US green bonds into the portfolio calls for an added US management presence, at the very least.
August 21, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 4
Event: BlackRock files for a new environmental bond ETF.
Briefing Points: i) BlackRock has filed for a new fixed income ETF, which would be included in its iShares series, ii) The new ETF would invest in investment-grade green bonds issued to finance environmental projects, and iii) The ETF will be managed by Scott Radell and Darren Wills (currently managing iShares Green Bond Index Fund), and benchmarked against the “investment results of an index composed of global investment-grade green bonds”.
Affected Fund(s): iShares Global Green Bond ETF
Asset Classes: US Fixed Income
Management Company: BlackRock, Inc. (New York, NY)
DD Concern: New untested mandate and/or management team
Marketing Considerations: The firm’s accelerated rate of introducing new sustainable funds and its senior management support indicates a continuing dedicated effort to position BlackRock as the global leader in the sector. Further, the firm has the management expertise and resources to back it up. The fund’s European UCITS counterpart, the iShares Green Bond Fund ETF, has attracted EUR 158.5 million (US$184.2 million).
August 20, 2018
DUE DILIGENCE Alert: MODERATE
COMPETITIVE Alert: 1
Event: Vontobel to merge 2 of its Swiss-based sustainable funds.
Briefing Points: i) Vontobel will merge two of its sustainable funds effective August 30, ii) The Vontobel Sustainable Swiss Equity Concept fund will be merged into their Sustainable Swiss Equity fund – Marc Hanni will manage the combined strategy, and Iii) The merger is designed to “streamline” Vontobel’s offerings.
Affected Fund(s): Vontobel Sustainable Swiss Equity fund
Asset Classes: Non-US Equities
Management Company: Vontobel Asset Management, Inc. (New York, NY and Switzerland)
DD Concern: Portfolio management consistency
Marketing Considerations: Clearly there was overlap in the two funds and the merger cleans this up, but one needs to ask why did such a redundancy of products occur in the first place? If they were designed to serve selected investor groups, will the merger continue to adequately meet these mandates?
August 20, 2018
DUE DILIGENCE Alert: LOW
COMPETITIVE Alert: 3
Event: LGIMA plans to build out its ESG business in the States.
Briefing Points: i) LGIMA’s CEO Aaron Meder announced that the firm plans to expand its ESG business in the US, particularly among public funds on the East and West coasts, and foundations and endowments, ii) The firm already has capabilities in ESG data and analytics from its UK business, which recently announced the hiring John Hoeppner — previously an ESG team member at Arabesque AM — as head of stewardship and sustainable investing, and iii) LGIMA is the US subsidiary of the London-based insurer Legal & General Group.
Affected Fund(s): All LGIMA strategies
Asset Classes: US and Non-US Fixed Income
Management Company: Legal & General Investment Management – America (Chicago, IL)
DD Concern: Competitive strategic move/repositioning
Marketing Considerations: The firm’s established expertise, especially among European plans, and recent moves to reinforce its “sustainable culture” are solid steps to grow its US institutional business. Also, it already has an established client-base of 200+ DB plans in support of its qualifications. However, its potential for US retail advances are limited and more daunting.
August 16, 2018
DUE DILIGENCE Alert: HIGH
COMPETITIVE: 3
Event: Two new sustainable funds from UBS.
Briefing Points: i) UBS Asset Management has introduced 2 new sustainable funds that will initially only be available through its wealth management platform – eventually they may also offered to institutional clients, ii) The funds are managed by UBS’s asset management group and will be selections in UBS Wealth Management’s ESG model portfolios, and iii) One of the new funds invests in the stock of companies exhibiting sustainable impacts, and the second fund is a portfolio of bonds issued by banks backing economic and social projects.
Affected Fund(s): UBS Engage for Impact Fund and UBS Sustainable Development Bank Fund
Asset Classes: US Equities and Fixed Income
Management Company: UBS Asset Management – Americas (New York, NY)
DD Concern: New untested mandate and/or management team
Marketing Considerations: The funds are being issued with a dedicated distribution channel in place, which may help to off-set their relatively specialized objectives. In addition, they appear to have a relatively narrow non-retail target market focus, at least at present.
August 16, 2018
DUE DILIGENCE Alert: LOW
COMPETITIVE Alert: 1
Event: Hudson expands sustainable practice with a new partner.
Briefing Points: i) Hudson Sustainable Investment, a specialist in private equity, venture and sustainable infrastructure issues, has hired a new partner, Vishai Shah, to help build their US-based practice, ii) Mr. Shah, who previously was an equity analyst with Deutsche Bank, specializes in global technology and sustainable investments, and iii) Mr. Shah will lead a team of analysts who will expand Hudson to NYC – the firm will maintain its London base.
Affected Fund(s): Hudson Sustainable Investment Portfolios
Asset Classes: US and Non-US Equities and Fixed Income, and Alternatives
Management Company: Hudson Sustainable Investment Management LLC (New York, NY)
DD Concern: Portfolio management team change
Marketing Considerations: The firm’s expansion to the US reflects the widening appeal of the domestic sustainable marketplace. It also serves as an indication of where the future of sustainable investments may lie, i.e., direct financing of sustainable companies.
August 15, 2018
DUE DILIGENCE Alert: LOW
COMPETITIVE Alert: 4
Event: Parnassus brings on sales/marketing support.
Briefing Points: i) Thomas Ganey is joining Parbassus Investments as manager of institutional client services, ii) Mr. Ganey was previously with Raymond James where he was a mutual fund analyst, and iii) At Parnassus, Mr. Ganey will be the liaison between investment research and sales/marketing, and will be responsible for investment content analysis.
Affected Fund(s): All Parnassus Mutual Funds
Asset Classes: All
Management Company: Parnassus Investments (San Francisco, CA)
DD Concern: Competitive strategic move/repositioning
Marketing Considerations: Tapping a regional brokerage person for this position signals a possible move to build out the firm’s distribution network especially among regional intermediaries with established client lists. The institutional link should also not be overlooked, particularly as it is related to efforts to more clearly define the firm’s desired market niche. The technical support to the reps in the field is a clear plus.
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DEFINITION — ALERT RATINGS
Due Diligence (“DD”) Alert: Ranks each identified sustainable fund event or development according to a three-point “call to action” scale that ranges from Low to High, defined as follows:
LOW: A preliminary review and evaluation is recommended, but no on-going monitoring or manager meeting is needed.
MODERATE: Near-to-mid-term review and evaluation is recommended along with a manager meeting.
HIGH: Immediate manager contact and meeting are recommended, plus detailed review and evaluation – scheduled on-going more detailed monitoring and follow-up manager meeting(s) are advised.
Marketing Considerations: Ranks the level of required response/urgency for each identified sustainable fund’s product development, sales, promotional or other strategic marketing event or development. The ranking scale is 1 to 5, where a rank of 1 indicates the lowest level of urgency, requiring little or no competitive response, to a rank of 5 that indicates the highest level of urgency, requiring immediate competitive and/or marketing and sales force response.
